samchain/econo-pairs-v1 huggingface dataset:
But there is no more important challenge than keeping inflation and inflation expectations anchored on the target. I have enjoyed the opportunity to look back over the past ten years, but, as the saying continues, the only meeting that matters is the next one. When Eddie George and I sat in the Governor’s office on that sunny Bank Holiday morning in 1997, we knew we had been given an opportunity to change monetary policy for the better. We had to grab it with both hands. That is exactly what the Bank has done. References Blinder, A S (2004), The Quiet Revolution: Central Banking Goes Modern, Yale University Press. Blinder, A S and Morgan, R (2000), “Are two heads better than one? An experimental analysis of group vs individual decision making”, NBER working paper no 7909, September. Goldman Sachs Economic Research (2006), “Should the MPC Have Pre-Announced the Hike?”, UK Economics Analyst, 6, 9. Goodhart, C A E (2007), “Whatever Became of the Monetary Aggregates?”, Peston Lecture at Queen Mary College, London. Hennessy, P (2007), Having It So Good: Britain in the Fifties, Penguin. King, M A (2002a), “The Monetary Policy Committee Five Years On”, Speech to the Society of Business Economists, Bank of England Quarterly Bulletin, Summer 2002. King, M A (2002b), “No Money, No Inflation: The Role of Money in the Economy”, Bank of England Quarterly Bulletin, Summer 2002. King, M A (2004), “Speech at the Eden Project, Cornwall”, http://www.bankofengland.co.uk/publications/speeches/2004/speech229.pdf.

The financing of the state pension systems are of vital importance for the taxpayers’ confidence in the economy. If we have learned anything from recent economic developments, it is that households and firms have become better and better at putting things in context, and to change their behaviour accordingly. When forward-looking taxpayers have realised the obvious - that the pension systems  BIS Review 45/2003  3  sooner or later must be overhauled - it has also affected their behaviour. Because in the end, the taxpayers have to foot the bill when the systems are underfinanced - either by way of higher pension charges or lower benefits. Irrespective of which, uncertainty results in households preferring to save a little extra rather than consume. This could also be one explanation to why saving in many central European countries has remained at a comparatively high level. It is therefore pleasing that steps have now been taken in the three largest euro area economies to reform their pension systems. Even if these reforms are insufficient to secure the government finances in the long term, they are important stepping stones towards healthier economic growth. Tax and benefit systems a key question for the labour supply Income tax and benefit systems are also important for long-term potential growth in a country, particularly in countries with a high tax burden. It is indeed not possible to establish with certainty that a high tax burden in itself would constitute a limitation to growth in the long term.
The inflation target may be formulated as an interval, for example 1-3 per cent, as in New Zealand or, as in Norway, as inflation of close to 2.5 per cent over time. Partly owing to various disturbances to the economy, inflation cannot be expected to remain at target constantly. Central banks have somewhat varying formulations as to how rapidly inflation should be brought back to the target. Some central banks state that inflation should be brought back to target within a “reasonable time horizon” or “over the medium term”. Others have quantified that the inflation target should normally be attained within two years, as in Sweden, or as in Norway, where the interest rate is set with a view to stabilising inflation at the target within a reasonable time horizon, normally 1 – 3 years. In practice, the monetary policy conducted by most central banks is nonetheless similar. They orient monetary policy towards maintaining low and stable inflation. All central banks will reduce their policy rate when there are prospects of low inflation in the medium to long run and raise it when there are prospects of high inflation. What distinguishes Norges Bank from other central banks? Monetary policy in Norway is in line with the monetary policy conducted by a number of central banks in the OECD area. One difference, however, is that Norges Bank is conducting monetary policy in an oil economy.

But the Federal Reserve states itself that in the long term stable prices are a condition for sustained output and employment growth. The introduction of formal inflation targeting has been under discussion in the US for several years. The debate was rekindled with the appointment of Ben S. Bernanke as Chairman of the Federal Reserve on 1 February this year. He has argued that quantifying the concept of long-term price stability may reduce the uncertainty associated with monetary policy and more effectively anchor longterm inflation expectations. In his view, however, the introduction of a long-term inflation target is fully  2  BIS Review 80/2006  consistent with current US monetary policy 1 . There has been little interest in US political circles in changing the monetary policy framework 2 . Pursuant to the Regulation of March 2001, the mandate for monetary policy stipulates that monetary policy shall be aimed at stability in the Norwegian krone’s national and international value, and at the same time underpin fiscal policy by contributing to stable developments in output and employment. The operational objective of monetary policy is low and stable inflation, with annual consumer price inflation of approximately 2.5% over time. The mandate implies that inflation targeting shall be flexible, so that weight is given to both variability in inflation and variability in output and employment. The concrete target for inflation varies somewhat among central banks.
Charles Bean: The Monetary Policy Committee’s policy dilemma Speech by Mr Charles Bean, Deputy Governor for Monetary Policy of the Bank of England, at the Association of British Insurers’ (ABI) Economics and Research Conference, London, 3 March 2011. *  *  *  Almost three years ago, in April 2008 when the financial crisis was still in its early days, I gave a speech entitled “Walking the Tightrope” 1 . In that speech, I noted that the United Kingdom was faced with an unenviable conjunction of developments. On the one hand, the dislocation in credit markets was weighing on demand. In due course, that could be expected to put downward pressure on inflation. On the other hand, rapid growth in the emerging economies, especially in Asia, had put upward pressure on oil prices, which went on to peak at nearly $ a barrel in July of that year. Higher oil prices were squeezing demand too, but were adding to, rather than reducing, inflation. In the face of these twin forces, activity began to fall, but consumer price inflation rose sharply, reaching 5.2% in September. For the first eight months of that year, the Monetary Policy Committee was faced with setting interest rates so as to balance the risk of downward pressure on inflation from a sharp slowdown in growth associated with the financial crisis, against the risk that the period of high oil prices and elevated inflation would result in a wage-price spiral.

But this disentangling is done, or is at least attempted in this paper, and the pieces of evidence that are provided in it point precisely to the importance of the financial reform. Let me give you some results that in my opinion are relevant: i) we find that banks with higher capital ratios suffered less in terms of, for example, increases in CDS spreads; ii) we also find that strongly capitalised banks showed greater increases in lending than other banks, and, iii) a third result is that the uptake of the public support measures was higher precisely in those banks that had higher capital ratios. The interesting thing about this evaluation is that at the same time there might be some lessons to learn. We are already highlighting some pieces of the regulatory reform that might not be working as intended and let me focus on one issue on which Claudio has also worked in depth in recent years, which is to understand whether capital and liquidity buffers are  2  usable as envisaged. We wanted banks to have higher levels of capital precisely to be used in a situation of crisis. So, if in the end we observe that this capital is not being used, there is a problem, and we might need to modify some parts of the legislation. The evidence is that banks might have been hesitant to use the regulatory capital buffers had it been deemed necessary in practice.
Note, however, that inflation measured with UND1X is not affected; the rate remains stable around 2 per cent throughout the period. Neither are any monetary policy measures taken in this example, as long as inflation expectations do not change. The reason is that by the time a repo rate cut would elicit effects, the tax changes would no longer be affecting the inflation rate. This is evident from the absence of any effect on underlying inflation. Initially, moreover, the interest expenditure item in the CPI would move in the ‘wrong’ direction and lower CPI inflation even more. If medium-term inflation expectations were to be influenced, on the other hand, monetary policy action might be called for. An adjustment of expectations in the light of the tax change has consequences for underlying inflation, so that inflation may be below the target somewhat further ahead. 7  BIS Review 61/1999  9. Permanent and transitory inflation A schematic account Initial position Economic development stable, underlying inflation UNDINHX - in line with the target. 4  3 UNDINHX  Good coffee harvest and increased supply of oil. These commodities’ prices fall sharply in July year 0 and are then stable at the new, lower level. •CPI-inflation is lowered for a period of twelve months and so is UND1X. •But underlying inflation measured with UNDINHX remains stable.

In such a context there is a risk that the banks could act even more procyclically than they usually do and would amplify the cycle. To be clear, the uncertainties and the economic slowdown have so far not caused banks to tighten their lending conditions or to grant less credit. But we need to keep a very close eye on how this evolves. How will the banks behave if the economic slowdown continues? Would you say that financing conditions in the euro area as a whole have already tightened significantly? Financing conditions have tightened somewhat in recent months, but not significantly, thanks in part to our forward guidance on interest rates. This partly compensates for such effects. But you’re absolutely right, we as central bankers must always ask ourselves whether our monetary policy stance is appropriate for us to attain our objective. And what is your answer at the moment? We have revised our assessment of risks to growth downward. I would say that is a clear indication that the level of alert is higher than before. 2/5  BIS central bankers' speeches  Three quarters of below-potential growth, higher risks and at least slightly tighter financing conditions – what does that signify for the inflation outlook? Is the ECB’s Governing Council losing its confidence in reaching the target of 2% over the medium term? Three quarters of below-potential growth are certainly not good news. But we have a medium term perpective.
Borrowers are much more likely to default on their consumer debt than their mortgages and, of course, there is no security backing these credit card and personal loans. Over the past 10 years, write-off rates on consumer credit by UK banks have been ten times higher than on mortgages (Chart 3). And those defaults are much more sensitive to economic conditions. Widespread defaults can, by damaging the financial system, affect the wider economy. These dangers of debt mean countries with more of it, and particularly those that have built up debt quickly, can have more vulnerable banks and deeper recessions (Chart 4). In the jargon, more debt makes the distribution of economic risks skewed and ‘fat tailed’. Work by teams at the Bank of England has looked back at how the distribution of economic risks was shifting through time as debt and financial risks ebbed and flowed in the past. It shows an estimate of what, at each point in time, was the distribution of possible future paths of economic growth. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  A pronounced downside skew to that distribution was developing from the early 2000s. By the time of the crisis, the probability of a fall in economic activity of more than 2% was about 1 in 5. That’s five times more likely than normal (Chart 5). The spiral of complacency  Why do these dangers arise? Why does the financial system lead the economy down a path that risks much deeper recessions?

But if we want to be able to benefit from the advantages of this system in our national interests going forward, we must make sure now that the three mainstays of sound money can continue to perform their roles and provide support. 11  For more information on the interplay between government debt and monetary policy, cf. inter alia Jordan, Thomas J. (2011), Government debt and the independence of monetary policy, speech at the Europa Forum, Lucerne, 8 November. 12 For more information on the importance of a central bank’s equity, cf. inter alia Jordan, Thomas J (2011), Does the Swiss National Bank need equity?, speech at the Statistisch-Volkswirtschaftliche Gesellschaft, Basel, 28 September. Page 8/8  What constitutes sound money? Thomas J. Jordan Chairman of the Governing Board Swiss National Bank Economic Conference, Progress Foundation Zurich, 8 October 2020  Chart 1  2  08.10.2020 What constitutes sound money? | Thomas J. Jordan | © Swiss National Bank  Chart 2  3  08.10.2020 What constitutes sound money? | Thomas J. Jordan | © Swiss National Bank  Chart 3  4  08.10.2020 What constitutes sound money? | Thomas J. Jordan | © Swiss National Bank
Several factors underpin why strengthening relations with African central banks is a high priority for the New York Fed at this time, as demonstrated by the range and seniority of our delegation. First, in the increasingly interconnected global economy and financial markets, the need to better appreciate dynamics in cross border flows of capital and goods has never been greater in order to better understand developments in one’s own economy. This is true in the U.S. as it is in all of your countries. As Africa has become an increasingly important contributor to global output, with some of the fastest growing economies in the world over the past two decades, a better shared grasp of the dynamics in both our economies is very much in all of our interests. Additionally, with the U.S. dollar serving as the world’s primary reserve currency, we at the Fed have a very natural and symbiotic relationship with many central banks around the world including those in Africa. This is the broader context behind our efforts to enhance our cooperation with African central banks, building on existing people-to-people exchanges exemplified by the long-standing participation of African central bankers in the New York Fed’s annual central bank seminar and specialized training courses, and other Federal Reserve cooperative training arrangements with African central banks on bank supervision topics. Participation in this gathering will hopefully only strengthen and deepen these relationships.

Thus, a key component of any efforts to enhancing financial education and protection must be improving individuals’ ability to ask the right questions and increase their awareness that ultimately they are responsible for their investment decisions. BIS central bankers’ speeches  3  “Conclusion” So, we’ve discussed how important consumer protection and education are. And we’ve covered the roles of each of the three groups in bringing about better protection and education. Let me now try to bring these strands all together. Something that became very clear in the wake of the financial crisis was that apparently low-probability risks at the margin of an industry can have profound impacts – and that a rules-based system alone is inadequate in guarding against them. After the crisis, there has been increasing recognition that each of us in fact operates in a financial eco-system – in some respects, a fragile system – in which the well-being of the whole rests on the health and actions of each part. Through suasion and regulation, financial regulators like the HKMA can do a lot to support consumers. But we will always be one step remote from the point of transaction. That’s why we look to banks and other financial institutions not just to follow our rules, but to show leadership by really engaging in this area. Institutions can do a lot, individually and together, to self- and peer-regulate and, above all, ensure integrity throughout their organisations, particularly at the consumer-facing levels.
Monetary policy implications (1) The character of these shocks has important implications for monetary policy. It is a famous dictum that monetary policy affects inflation with ‘long and variable lags’. [7] While these lags are difficult to predict and likely to vary across time in concert with the broader state of the economy, we typically think that monetary policy actions taken today will have their maximum impact on inflation at a horizon of 18 – 24 months. [8] By implication, monetary policy cannot entirely offset the impact of external price shocks on UK inflation. [9] And attempting to do so may serve to add to rather than contain inflation volatility. As we have seen, higher energy prices feed through to CPI inflation within a matter of months, via both direct and indirect channels. If a rise in international oil or gas prices is a genuine shock – in other words, it could not have been anticipated – then even an immediate monetary policy response would not be able to offset its initial impact on UK inflation. The offset would only feed through as the lags in policy transmission unwind. As a result, even a very active employment of UK monetary policy cannot prevent the emergence of some short-term volatility in UK CPI inflation. What’s more, given the uncertainties surrounding (a) the lags in monetary policy transmission and (b) the direction and magnitude of further external price shocks, the danger exists that attempts to ‘fine tune’ inflation developments using monetary policy become a source of volatility themselves.

The FOMC consists of the Board of Governors plus the presidents of each of the 12 district Banks, and it meets in Washington, D.C., eight times per year to deliberate and vote on monetary policy. As the current New York Fed president, I am vice chairman at these meetings and have a permanent vote. At these meetings, the committee members and I each present our current outlook for the economy. For these assessments, we augment input from our research departments with critical information about local economic conditions supplied by our boards of directors, regional advisory councils and conversations with local stakeholders. My visit to Queens today is a part of these regional activities. One thing that makes my job even more interesting is that New York has some roles unique within the Fed. For example, the New York Fed is the Reserve Bank charged with implementing monetary policy. At the direction of the FOMC, we buy and sell Treasury securities. We are also the eyes and ears of the Fed on Wall Street, and we supervise many of the largest financial institutions in the country. We operate Fedwire® – the conduit for large money transfers between banks. And, we provide banking services to the U.S. Treasury, and central banks and governments from around the world.
Nevertheless, through our communication, we have sought to take account of the possibility that debt and asset price developments may be a potential source of subsequent instability, but it is neither our ambition nor our conviction that monetary policy can control developments in these variables. Moreover, we have stated in clear terms that the interest rate has been unusually low and that it would have to increase gradually to a more normal level. Since 2005, this has been reflected in our own interest rate forecast. Since inflation expectations have been firmly anchored, we have also been able to increase the interest rate gradually even though actual inflation has been below target. The time horizon for reaching the target in our forecasts has been stretched. Let me now turn to economic models and their use. Even though monetary policy cannot operate with objectives for developments in the labour market, asset prices or debt accumulation, these and other economic variables can provide information about future price developments, which is included in the basis for interest rate setting. In order to glean as much information as possible about future inflation and to gain insight into how the interest rate is affecting the economy, Norges Bank – like other central banks – uses economic models as an analytical tool. What makes a good model depends on the intended purpose of the model. The models' purpose must thus be given decisive weight in the choice and design of modelling tools.

Furthermore, the statistics should be comparable, but not necessarily  2  See Mervyn King, Governor, Bank of England on the occasion of the tenth anniversary of the central bank's independence: (see Financial Times, Thursday, 3 May). 6  BIS Review 102/2007  identical, across countries. It is positive that others are interested in and debate statistics production.3 With an inflation target for monetary policy, measuring inflation is of particular importance. CPI inflation is used as a reference in the wage negotiations each spring. Many financial contracts are linked to CPI inflation. A number of international studies have concluded that there are considerable measurement errors in official consumer price indices.4 The main criticism is that official indices are not sufficiently adjusted for changes in quality and that they do not capture consumers’ possibilities for shifting consumption away from the goods that show the fastest rise in prices. Many of the studies have concluded that consumer price indices overestimate the actual rise in prices. That is one reason why inflation-targeting countries set the target higher than zero. But there are also studies that point out that consumer price indices can underestimate the rate of increase for some components. Against this backdrop, I will now discuss two particular notional concepts used in estimating the consumer price index in Norway to illustrate the uncertainty; how to impute rent for owner-occupied dwellings and how to measure clothing prices.