samchain/econo-pairs-v1 huggingface dataset:
Although this increase owes partly to the more volatile components of the Consumer Price Index (CPI) and the depreciation of the peso, inflation of the items in the basket that are most sensitive to the activity gap—ie. services and nontradables—has risen gradually, but steadily, over the course of 2018. This is in line with the growth recovery that began more than a year ago, in a context of favorable external conditions and a clearly expansionary monetary impulse. This process took a pause in the third quarter due to specific factors affecting mining and manufacturing, but it is estimated to resume in the fourth quarter. The October Imacec released this morning is an indication, as it shows activity growing 4.2% annually, with the non-mining component growing 5.1%. With this, the economy will grow 4% this year and between 3.25% and 4.25% in 2019. Inflation will follow a similar path, slowing down for some months as a result of the fall in international fuel prices, to then begin rising and converging to 3% towards the end of 2019. Key factors in this outlook are the observed dynamism of investment and a vision of the labor market that, once all the available information has been analyzed, and factoring in the impact of the significant immigrant flow of recent years, shows that its dynamism is in line with the better performance of the economy.

In this connection, guidance for financial institutions to classify economic activities that contribute to climate change objectives is provided through our work in developing a principles-based taxonomy. This would be the start to build deeper understanding in climate risk, for financial institutions to better identify, assess and manage the risk. The Bank is now working to finalise the Climate Change and Principles-based Taxonomy, which is expected for issuance next year. The Bank also collaborates with the financial industry to accelerate initiatives to build the required capacity and expertise relating to green and sustainability. Through the Value-based Intermediation Community of Practitioners (VBI CoP), various guidance documents have been developed to spur adoption of VBI, which considers the triple bottom line of people, planet and prosperity. In August this year, the Value-based Intermediation Financing and Investment Impact Assessment Framework (VBIAF) Sectoral Guides on Palm Oil, Renewable Energy and Energy Efficiency were issued to guide financial institutions in implementing VBIAF on these sectors at a more granular and transactional level. Work is also in progress to develop the next VBIAF Sectoral Guides on Manufacturing, Oil and Gas, Infrastructure and Construction, targeted for issuance in 2021. Furthermore, greater climate disclosure by financial institutions is in the pipeline; as we are progressing plans to further encourage financial institutions to adopt the TCFD recommendations for climate-related disclosure.
The aim of preventing inflation expectations from becoming entrenched below the operational target of 2.5 per cent was one of the main reasons that the interest rate was lowered to a very low level in 2003 and 2004, when inflation receded and approached zero. Low interest rates stimulated demand and output and have gradually led to prospects for higher inflation, to which we have responded by increasing the interest rate. Consumer price inflation is still fairly low, but capacity utilisation is now at such a high level that inflation is projected to move up gradually to 2.5 per cent. Higher interest rates will contribute to a gradual decline in capacity utilisation so that inflation will not become too high. In spite of several years of fairly low inflation, inflation expectations, as for example these – and not necessarily precisely – are measured by TNS Gallup’s expectations survey, have held up around the inflation target. Even if there has been a longer period of low and relatively stable inflation expectations, we must be alert to developments that may change this. Norway’s and other countries’ economic history show that inflation and inflation expectations can become unhinged. There are many self-regulating mechanisms in the economy, but inflation does not regulate itself. Through history, monetary policy has in various ways been geared towards providing the economy with a nominal anchor. From the mid-1800s, many countries decided to peg the value of money to gold. Norway switched from the silver standard to the gold standard in 1874.

Since the introduction of the euro in 1999, the average interest rate on three-month euro deposits has been 3%, while the three-month Swiss franc rate has been 1.4%. If we assume a difference of about 1% in the expected level of inflation between the euro area and Switzerland, the Swiss real interest rate advantage accounts for 60 basis points. •  Switzerland is also a firm believer in flexible exchange rates. Our monetary regime has been unchanged since 1973, when the peg to the US dollar was removed. Today, the Swiss franc is freely determined by market forces. Our last foreign exchange intervention dates back to 1995 – and that was a coordinated action in favour of the US dollar! •  And what about the European issue? As you know, we are not a member of the European Union; nor do I foresee Switzerland joining the EU in the near future. The Swiss people remain sceptical about the efficiency of the Union and are very aware of what they stand to lose in terms of political rights and economic freedom in the event of integration. But our relationship with the EU is of key importance, since Europe accounts for two-thirds of our foreign trade. In order to secure our access to the European market and to avoid discrimination, we concluded two packages of bilateral agreements with the Union – in 2002 and 2004.
Greece, Ireland and Portugal are the three countries that have benefited from EU and IMF rescue packages. I will return to this in greater detail in a minute. The financing conditions of a number of other euro area countries have been extremely tight for the past few months, but they have not required bail-outs. This is particularly the case of Spain and Italy. Here too, certain economic or political weaknesses along with deteriorated public finances are stoking fears in financial markets, which – I should say in passing – have the unfortunate habit of lumping all players together and always expecting the worst. I would like to stress one point: the current crisis is not a crisis of the euro but a sovereign debt crisis. Moreover, we can see that all the turmoil that has been affecting the economy for the past few years is ultimately due to indebtedness: first, US household indebtedness and then sovereign indebtedness. Nevertheless, since end-2009, the crisis has revealed major shortcomings in the implementation of fiscal discipline and, more generally, in the economic governance of the euro area. The founders of the single currency had put in place the Stability and Growth Pact because they knew that a monetary union could not work without a common fiscal discipline. Its principles were sound, aiming to achieve a long-term balanced budget. But its implementation was greatly lacking.

We urge you to discuss the many issues confronting our respective countries and attempt to learn from each other as well as from the broader experiences from international experts and develop our skills and expertise. We also look forward to your report at the conclusion of your deliberations. Let us also offer all of you our continued co-operation in your collective endeavors to combat money laundering and terrorist financing activities. Finally, we wish you a successful learning experience and hope that your efforts will effectively contribute to the prevention and suppression of money laundering and financing of terrorism. BIS Review 9/2007  3
But the balance of evidence so far seems to me to suggest that MPC’s May forecast of the growth path remains broadly intact. And, crucially, that the domestic economy is likely to generate the relatively gentle inflation pressure necessary to meet the target over the next two years, as the current external inflationary pressures from sterling’s depreciation wane. The May forecast was of course conditioned on a market yield curve that implied a limited and gradual tightening of 75 basis points over the forecast period. 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  So has the need for a stodgier approach now gone? It seems to me that while diminished, there remains considerable uncertainty about the supply side. Domestic inflation pressures, while strengthening a little are not yet established at levels consistent with inflation at target (Chart 8). Pay growth has established itself in the 2.5-3% range. But the latest readings do not signal strongly that pay growth will make the next step to establish itself firmly in 3% territory in line with the May forecast. 12  We may still be underestimating supply in the labour market. 13  In short we are still learning about the relationships between key economic variables in the post crisis economy and are still a long way off the old rules of thumb. This for me still implies an approach with a little more resistance in our reaction to developments. Such an approach is not, however, a stopped approach.

This approach combines mobile banking solutions with person-to-person contact, except that the customer is not engaging with a bank, but rather with a supermarket counter staff, grocery shop owner, post office or village headman. The elements of trust, Know Your Customer and value-added advisory services can be more effectively met using this approach, without the corresponding high investment cost of establishing physical banking branches. Today's forum provides an excellent opportunity for all of us here to exchange ideas and experiences in these areas. Policy and regulatory concerns pertaining to branchless banking Let me now turn to my second point, which is about the policy concerns of regulators in relation to branchless banking services. The first concern is related to the need to continuously balance between prudential controls and allowing innovation to flourish within the financial sector. To site a recent well known example, the events in the US sub-prime markets and derivative products serve as a good lesson where innovation significantly outpaced the capacity of the regulatory environment to exercise prudential oversight, and prevent distress to the financial system. The environment within which branchless banking will flourish requires a great deal of innovation in terms of executing transactions, maintaining proper audit controls and ensuring fraudsters do not take advantage of unsuspecting customers. As regulators we are particularly concerned where deposits are accepted by non-bank entities, acting in the capacity of an agent to a financial institution.
The costs of digitalisation – in investment – are mostly fixed; its gains increase in proportion to size. This brings me to the third challenge, that of the consolidation of banking institutions in the euro area. Because of a still incomplete Banking Union, the European banking sector remains too fragmented compared to the US market: the market share of the five main European banks stands at 20% against more than 40% in the United States. In this regard, I would like to applaud the open approach of the Federal Minister of Finance Olaf Scholz. Beyond the debate on deposit guarantees, which in my opinion calls for a pragmatic compromise rather than a political confrontation, his merits are threefold: first, advocating European financial sovereignty after Brexit; this requires adding a stronger Banking Union and a Capital Markets Union. Second, proposing a common bank liquidation procedure, in order to deal more rapidly and effectively with failing banks. Finally, overcoming the blockages of “host countries” of subsidiaries, in order to facilitate the constitution of European cross-border banking groups, including when the parent company is German. Of course, many things still need to be negotiated, notably the necessary reduction of risks. But the Scholz proposals are putting back in motion this key issue for the solidity of the euro area and the smooth financing of investment. Of course, there exists a diverse range of consolidation models across Europe, and in this movement, small banks must not relinquish their values.

German inflation has been lower under the aegis of the ECB in the past 20 years than in the two preceding decades: 2.9% on average from 1979 to 1998 compared with 1.4% since 1999. The permanent stability of exchange rates between our economies is an undeniable advantage for German exporters: in 2018, 36% of German exports were to euro area countries. The low level of interest rates is itself partly a reflection of Germany’s large savings surplus. And Switzerland, another country that is in surplus but that is not part of the euro area, has to apply interest rates that are even more negative! Let us be in no doubt: the euro is an asset and not a burden for Germany. This brings me finally to the fourth cliché: the ECB’s monetary policy has betrayed its mandate. This idea was propagated in a recent “memorandum” by a number of former central bankers. I have every respect for them as people,  Page 4 sur 7 but I disagree with their argument. They unfortunately chose to ignore the positive results of non-standard monetary policies. Jean-Claude Trichet himself, who can hardly be accused of laxity, underlined these benefits, and I would just like to remind you of them: estimates of the effectiveness of the ECB’s policies put the impact on growth at around 2.5 percentage points and the impact on inflation at between 1 and 1.5 percentage point for the period 2014-18. What is more, since 2013 the euro area has created 11 million jobs.
Similarly, the current unemployment rate of 9 percent is well above most estimates of the nonaccelerating inflation rate of unemployment (NAIRU) – the lowest rate of unemployment consistent with sustained price stability. In the pre-crisis period, the NAIRU was likely in the region of 4.5 percent to 5 percent. There are several reasons why the NAIRU may now be higher. First, extended unemployment compensation benefits create incentives for prospective workers to keep looking for better jobs rather than accept less attractive positions. Empirical work on this subject suggests that the NAIRU might currently be roughly 1 percentage point higher because of this factor. However, this effect will only persist for as long as the extended benefits are in place. Second, the rise in unemployment has been associated with an increase in the degree of mismatch between unemployed workers’ job skills and available job vacancies. Some cite the upward shift in the Beveridge curve, which illustrates the relationship between unemployment and job vacancies (Chart 22), as evidence of this effect. Third, the longer that people are unemployed, the more their skills tend to atrophy, which makes it harder for them to become employed in the future. For unemployed workers, the median duration of unemployment has climbed and a growing proportion of the unemployed has been jobless for long periods (Chart 23).

In the early phase a significant part of this income came from liquidity programs. More recently, the main contributor has been net interest on the expanded SOMA portfolio. At this juncture, SOMA continues to generate abnormally high net income. As policy eventually normalizes and the cost of financing assets via interest on excess reserves goes up, the net interest margin on the SOMA assets will return to more normal levels. However, the net interest margin is unlikely to turn negative because roughly $ billion of assets are – and have been for many years – funded by notes and coins in circulation, on which the Fed does not pay interest.
On the contrary, and since the very construction of the Euro was based on continuity with the most credible national currencies, it was foreseeable that interest rate convergence inside the future Euro area would take place progressively on the basis of a merge of different yield curves of the various currencies with the benchmark yield curve corresponding to the most performing and credible ones, as it effectively happened. - The recent nay votes from France and the Netherlands to ratifying the EU constitution rattled Europeans concerns for the future. Some observers immediately conjectured that the single currency was directly responsible for the muted economic performance of the euro area and publicly questioned its durability; however, the track record of the Single monetary policy, after only 6 years of implementation, has been really impressive: the inception of the euro has been associated with an increased macroeconomic and price stability within the euro zone, despite an unusual sequence of unfavourable events, adverse supply shocks and periods of global financial turbulences. The point I would like to set out today is that a high degree of credibility, transparency and predictability of the Eurosystem’s monetary policy is a key condition for its efficiency. I will provide you with an overview of the Eurosystem monetary policy strategy (part 1) and then will assess its main achievements (part 2).

William C Dudley: Opening remarks at the Transatlantic Economy – Convergence or Divergence Conference Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Transatlantic Economy: Convergence or Divergence Conference, Federal Reserve Bank of New York, New York City, 18 April 2016. *  *  *  It is my pleasure to welcome you to today’s conference. Over the past decade, the New York Fed has been working together with the European Commission and the Centre for Economic Policy Research in sponsoring a number of conferences on interdependencies and policy challenges on both sides of the Atlantic Ocean. Today, as in the past, we have a great program with many distinguished speakers from academia, and the private and public sectors. In particular, I would highlight the keynote speech following lunch by Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs. As the two largest economies in the world, the United States and the European Union have a shared stake in the vitality of the global economy. Without growth in both our regions, the global economy will not prosper and we will not be able to provide the conditions to enable our citizens to fulfill their aspirations. Both the United States and Europe suffered large social and economic costs from the financial crisis and the deep recession that followed. We continue to take steps to minimize the risks that we will ever find ourselves in that situation again.
After all, it is beyond doubt that those who took out mortgages at nominal rates have benefited greatly from negative real rates. There is no reason for such subsidy to continue with contributions from the Treasury. We are looking ahead to a time when we must wage a full-blooded assault on inflation. Hopefully this period will be short-lived, but while it is ongoing, lenders must work effectively with their customers so as to keep their debt service burden within tolerable limits. Most borrowers in the housing market have strong equity and therefore considerable scope for adjustments and restructuring. On this front, lenders must behave responsibly. Honoured guests:  6/8  BIS - Central bankers' speeches  The past few weeks of unrest in foreign financial markets - including the collapse of two banks in the US and the forced merger of two large Swiss banks - have opened people's eyes to how closely monetary policy, financial stability, and financial supervision are connected. In the US, weaknesses in the regulatory framework and the supervision of financial institutions not considered systemically important, together with the lack of an overview of financial stability, have prompted the Federal Reserve to slow down its policy rate increases. It has been said that monetary policy is handcuffed by financial instability in the US and elsewhere, and that central banks cannot take the necessary action against inflation because of systemic risk in the financial market. This situation erodes the credibility of monetary policy. It is our loss as well.

The stage was therefore set for the floodgates to open and private consumption to come gushing back as soon as public health measures were lifted early in 2022 and consumers had an opportunity to exercise their purchasing power. The objective of all economic policy is to maintain equilibrium in the domestic economy, to ensure that there is "neither too little nor too much", to paraphrase Thorbjørn Egner's When the Robbers Came to Cardamom Town. During the pandemic, economic policy leaders had to take on the biggest contraction in output since the end of World War II, followed by an abrupt turnaround and a torrent of demand together with an unexpected jump in import prices. The first half of the job keeping the economy up and running during a deep downturn - went well. But the second half - restoring equilibrium after the pandemic - is turning out far trickier. The surge in inflation that followed the pandemic took the world's central banks by surprise. Early on, there was talk of a temporary adjustment - inflation would evaporate, and quickly, too. That proved to be wishful thinking. On that front, Russia's invasion of Ukraine - with the associated surge in commodity, fuel, and food prices and disruption of supply chains - had a serious impact. The unfortunate fact is that inflation has hit double-digit levels in many parts of Europe. Every central bank on the continent is still in a monetary tightening phase.
4  BIS Review 70/2006  BIS Review 70/2006  5  6  BIS Review 70/2006  BIS Review 70/2006  7

The very different lending flows between firms and households in March reflect the nature of the policy approaches to supporting these two sectors. In the case of firms, policy support has been mainly channelled via the banking sector, largely in the form of government-guaranteed credit and central bank measures to support credit. By contrast, direct fiscal support in the form of automatic stabilisers such as unemployment benefits or short-time working schemes, rather than bank credit, has constituted the backbone of the policy actions aimed at supporting the household sector. Chart 14 Bank loans  https://www.ecb.europa.eu/press/key/date/2020/html/ecb.sp200519~e5203d3520.en.html  10/14  5/19/2020  Pandemic central banking: the monetary stance, market stabilisation and liquidity  (annual percentage changes)  Source: ECB. Notes: Monthly data. Adjusted loans (i.e. adjusted for sales, securitisation and cash pooling activities). The latest observations are for March 2020. While credit volumes are holding up in the aggregate, there are also some strains. According to the survey on access to finance of enterprises (conducted between 2 March and 8 April), small and medium-sized enterprises (SMEs) reported – in net terms – a decline in the expected availability of bank loans across countries and sectors (Chart 15). Chart 15 Change in the actual and expected availability of bank loans for SMEs across countries (net percentages of respondents, over the past and next six months)  Source: ECB and European Commission survey on the access to finance of enterprises (SAFE).