samchain/econo-pairs-v1 huggingface dataset:
Looking further out, price inflation is projected to drift down further to a level notably below wage inflation. Chart 4 Policy rate raised from a very low level  The policy rate was cut to zero during the pandemic in order to cushion the downturn in the Norwegian economy. When we saw that economic conditions were normalising, we embarked on a gradual normalisation of the policy rate. But when the labour market tightened and the inflation outlook indicated that inflation might run above target for some time, it was appropriate to raise the policy rate faster in order to bring down inflation. Monetary policy is starting to have a tightening effect on the Norwegian economy. We do not know with certainty what the peak policy rate will be, but we believe we are approaching that level. This may imply a more gradual approach to policy rate setting ahead. Chart 5 A somewhat faster rate rise Our projections are based on a rise in the policy rate to around 3 percent in the course of winter. With this path for the policy rate, the interest rate on housing loans may move up to between 4 and 4½ percent. The reason the rate path is little changed since June, despite far higher-than-projected inflation, is that we are now seeing clear signs of a slowdown in the economy. Easing economic pressures will contribute to curbing inflation further out.

Inflation in many countries is the highest seen in decades, and central banks in many trading partner countries have responded by raising their policy rates substantially over a short time. In Norway, inflation is markedly above our 2 percent target. Twelve-month consumer price inflation was 6.5 percent in August, far higher than we expected before summer. Prices for electricity and other energy products have risen to historically high levels. But prices for a range of other goods and services are also rising faster than normal. The consumer price index adjusted for tax changes and excluding energy products - the CPI-ATE - was 4.7 percent  higher in August this year than one year earlier. Prices for both imported goods and domestically produced goods and services are rising at a fast pace. We project that inflation will remain higher for longer than envisaged in June. The tight labour market has contributed to pushing up wage growth. There are signs of higher electricity prices ahead than anticipated earlier, and we expect firms to pass on some of the cost increase to selling prices. We also believe it will take a little longer for imported goods inflation to come down to a more normal level. The Committee assesses that there is a need for a higher policy rate to bring inflation down towards the target. A higher policy rate will pull down demand for both labour and goods and services, which will have a dampening effect on price and wage inflation.
As well as making it easier to resolve the crisis itself, clarity in this respect also affects how banks and other financial institutions develop their operations and also how supervision of them can best be shaped. Instead of thinking in terms of the sequence integration – supervision – crisis management, one should see it in the other direction, that is, crisis management – supervision – integration (Figure 1). My second thesis is that it is unfortunately very rare that this is done in practice. 7  For an example of a theoretical analysis of how consideration for financial stability can be built into a model for inflation targeting, see Woodford, M., “Inflation Targeting and Financial Stability”, forthcoming in Sveriges Riksbank Economic Review. BIS central bankers’ speeches  5  Figure 1 Bank regulation should be based on reverse induction  Timing of events  Logic of incentive analysis  Integration  Supervision  Crisis management  Crisis management  Supervision  Integration  Inadequate planning for crisis management in the monetary union This reasoning can also be applied to nations, not just to their financial systems. During the autumn, we have seen yields on government bonds soar in a number of euro area countries, particularly those with sovereign debt problems. It is quite clear that the euro area lacks the necessary institutions to manage such a crisis situation. In the United Kingdom, on the other hand, yields have not risen in the same way, despite weak public finances there too (Figure 2).

2  See, for instance, Eggertsson, G. and P. Krugman, “Debt, Deleveraging, and the Liquidity Trap”, Federal Reserve Bank of New York Working Paper, February 2011 and Mian, A., K. Rao and A. Sufi, “Household Balance Sheets, Consumption, and the Economic Slump”, Chicago Booth Working paper, November 2011. 3  See, for instance, Eichengreen, B., R. Rajan and E. Prasad, “Central banks need a bigger and bolder mandate”, Financial Times, 24 October 2011. 2  BIS central bankers’ speeches  there is then a risk that both will become unclear. The outcome may also be poorer and it may be more difficult to hold policymakers accountable.4 The problems are exaggerated by those who believe that both types of policy must be coordinated… I can understand both points of view, but I believe that both have exaggerated their arguments somewhat. Those who say that monetary policy and financial stability policy should be integrated to a greater extent sometimes give the impression that they believe the central bank should at every monetary policy meeting both determine the policy rate and activate a number of macroprudential supervisory levers to find a policy mix that is appropriate for both monetary policy and financial stability. I do not believe that this is the way things will be done – I believe that this way of thinking is too coloured by recent events. After all, it is not as though problems arise from overgenerous credit granting during every economic cycle. Most cycles are ”normal”, with no financial imbalances or balance-sheet problems.
Nor can we control the functioning of the global debt markets or become the regulators of all financial market intermediaries. What we as central bankers can do, however, is to understand the dynamics of the global debt markets – how they are evolving and whether they are sufficiently liquid and transparent. We can also ensure that banks perform their proper role in supporting the trading process through making sound credit decisions. Furthermore, we can enhance the price discovery process by promoting transparency in our own actions. Finally, and most importantly, we can help create conditions in BIS Review 108/1998  –5–  our own economies that will support sustainable, non-inflationary growth. In these ways, we as central banks can encourage the efficient functioning of the credit intermediation process in our countries, and in so doing, promote the welfare of the world economy, of which we are all a part. ***  BIS Review 108/1998

While high food and energy prices curb consumption on these products, they would also encourage investment and increase supply in the long-term. In short, the common view is that central banks have nothing to do but wait for the supplydriven shocks to work out their natural course. However, in the current environment where persistent and rapid increases in food and energy prices have been observed for a considerable period, the prevalence of this view has become questionable – especially in the light of current projections that foresee even higher prices in the near future. As a matter of fact, many countries under inflation targeting regime now project that inflation will converge to the target at the end of 2009 or in 2010, at the earliest. Going through a long period of high inflation is a serious risk for price stability. First, the general price level may shift upwards at a faster rate, as producers and workers in other sectors ask for higher prices and wages in response to the loss of their real purchasing power. The fall in real interest rates due to deterioration in inflation expectations is another risk, since lower real rates will lead to a faster pace of credit expansion. The common factor of these two risks is that persistent supply shocks may turn into demand shocks after a while. Thus, at some point, central banks have to decide to what extent they can tolerate the rise in inflation.
BIS Review 11/2005  1  Low inflation is not in itself a solution to problems like this. But it is a pre condition for solving them. Merseyside had bad luck to be confronted with more economic change in the second half of the twentieth century than most people could cope with at the time. Liverpool never lost its sense of humour, though there were times when it came close to losing its way. Sadly, you can’t laugh your way out of economic decline. High inflation and economic instability fostered the wrong climate for taking the long term decisions that were needed to give Merseyside a new future. The levels of economic inactivity and social deprivation that you are still grappling with today are in part legacies of the 1970s and 1980s, when the sharp ups and downs in inflation, interest rates and national output made it much harder to adapt to structural economic change at the regional level. But more recent success in delivering low inflation and economic stability has created a much better climate for you to succeed. Economic regeneration can’t get off the ground without inspired local leadership, and committed local partnerships. But even with them, it is a long haul to make the investments in infrastructure that modern businesses expect. And so called soft investments – in people, skills, and communities – are even more of a challenge. Low inflation and low nominal interest rates matter to you because they provide a sound foundation for just this kind of long term planning.

The other key uncertainty concerns the speed with which inflation will pick up. Consumer price inflation remains below the Government’s 2% target but there are good reasons to expect it to rise over the next few years. Input cost inflation has risen sharply, and import prices are not falling as much as they were. We think there is very little slack in the economy. The labour market is certainly tight. But the  2  BIS Review 11/2005  growth in labour costs has been surprisingly muted, and some cost pressures have been absorbed by lower profit margins. How long can this last? At present we think inflation is likely to rise above target sometime next year, though we judge the risks to be somewhat on the downside. But it’s a difficult call, and our judgement about the balance of risks will be influenced by the way the data shape up in the coming months. The MPC faces a familiar dilemma, torn between the importance of well grounded analysis and the need to act promptly. On the one hand, there is a case for waiting for more evidence on the issues that underlie these risks – as there almost always is; on the other hand, since interest rates take a year or more to affect the economy, we need to be pre emptive, to head off trouble at the pass so to speak, even at the risk of sometimes taking the wrong decision.
Separately, an ON RRP facility might affect the  8  The spread between the IOER and ON RRP rates should not be confused with the FOMC’s stance on monetary policy, expressed through a target range for the federal funds rate. Nor should it be thought of as a “corridor” operating framework for policy implementation. Within a corridor framework, relatively small changes in the supply of reserves can have a significant effect on equilibrium short-term rates, and the penalties and costs of holding too many reserves or too few reserves (set by rates on marginal deposit or lending facilities, respectively), generally limit the range of rate movements in the market. In an environment in which the supply of reserves far exceeds the demand, however, changes in the supply of reserves are not linked to movements in market rates. Instead, with elevated levels of reserves, the Federal Reserve’s operating framework more closely resembles a “floor” framework, in which interest rate control is established by directly administering a minimum rate (or here, a range of rates) in money markets. 9  A fuller discussion of the secondary effects of an ON RRP facility and options for addressing them can be found in Joshua Frost, Lorie Logan, Antoine Martin, Patrick McCabe, Fabio Natalucci, and Julie Remache, “Overnight RRP Operations as a Monetary Policy Tool: Some Design Considerations,” Federal Reserve Bank of New York Staff Reports, no. 712, February 2015. http://www.newyorkfed.org/research/staff_reports/ sr712.pdf.

These adjustments have allowed us to learn how ON RRPs might be used to support the monetary policy objectives of the FOMC. Our testing has demonstrated that ON RRP operations can set a soft floor on short-term interest rates. That is, while some trades may occur below the ON RRP offering rate, the volume-weighted averages of most money market rates have been above the ON RRP rate on nearly all days (Figure 2). Data across a range of money markets provide evidence that changes in the ON RRP rate affected pricing for both unsecured and secured instruments and that the operations successfully set a floor on short-term interest rates. While market participants are aware of the success in producing a floor from such volume-weighted rates as the fed funds effective rate and GCF Repo Index®, the Desk has been also examining detailed transaction-level data for evidence that the ON RRP sets a floor on nearly all overnight money market transactions. 12  The payment of interest on reserves has been in place since October 2008, although the Federal Reserve Board recently requested public comment on proposed technical changes to the methodology for calculating IOER. The proposal intends to enhance the effectiveness of changes in the IOER rate in moving the federal funds rate into the target range when changes in those rates do not coincide with the beginning of a reserve maintenance period. Further information is available at http://www.federalreserve.gov/newsevents/press/ bcreg/20150413a.htm.
BIS Review 84/2007  3  These factors, more than other differences in tax, accounting, or legal regulatory regimes, account for the bulk of the declines' share of equity and debt raised in the United States by companies around the world. And this shift is something that we benefit from, not just in the direct sense that U.S. financial institutions play an important role in those markets, but in the broader sense that we will gain from the improvements in economic growth that come from financial market development around the world. But in this context, we need to be more attentive to the risk that specific aspects of our system, regulations or other constraints, create a greater disincentive to locate a financial business here, or to invest here, or to raise capital here, than would have been the case five or ten years ago. We need to take a careful look at how we regulate financial activity in a world where capital is more mobile, and the structure of the financial system has diverged substantially from the system for which our regulatory framework was designed. That does not mean we should contemplate weaker regulation or lower standards. The strength of the U.S. system is in part the result of the confidence we have developed in the integrity and resilience of our markets, in part by establishing strong standards for investor protection, market practices, and safety and soundness. Sustaining this confidence will be critical to the future strength of our financial system.

We will benefit from more rapid growth in the rest of the world, but at the same time we need to be more attentive to addressing a range of challenges that could ultimately damage the prospect for future growth in living standards here at home. I want to talk about challenges we face in four areas: •  sustaining support for global economic integration,  •  the role of public policy in education and other areas that are critical to our capacity to adapt to change,  •  regulation and the role of the market, and  •  macroeconomic policy. Let me start with openness. The pressures that have come with globalization and technological change have led many to suggest that we should become less open as a country, that we should slow the pace of integration, or that we should provide greater insulation or protection from competition for selective parts of the U.S. economy. Moving in this direction would, I believe, be a fundamental mistake. More than ever before our fortunes are linked to those of the global economy. If anything, we need to become more open, not less; more open to trade in goods and services, but also to investment, to people and to ideas.
Forecasting memory, GDP Percentage points 0,5 Riksbank Time series model (AR(1)) Standard deviation 0,4  0,3  0,2  0,1  0,0 1  2  3  4  5  6  7  8  Kvartal  Sources: Statistics Sweden and the Riksbank  BIS Review 138/2007  9  Figure 6. Forecasting memory, employment Percentage points 0,5  0,4  0,3  0,2 Riksbank Time series model (AR(1)) Standard deviation 0,1  0,0 1  2  3  4  5  6  7  8  Kvartal  Sources: Statistics Sweden and the Riksbank  Figure 7. Forecasting memory, productivity Percentage points 0,7  Riksbank Time series model (AR(1)) Standard deviation  0,6  0,5  0,4  0,3  0,2  0,1  0,0 1  2  3  4  5  6  7  8  Kvartal  Sources: Statistics Sweden and the Riksbank  10  BIS Review 138/2007  Figure 8. Forecasting memory for the KPIX Percentage points 0,7  0,6  0,5  0,4  0,3  0,2 Riksbank Time series model (AR(1) with seasonal dummies)  0,1  Standard deviation 0,0 1  2  3  4  5  6  7  Kvartal8  Sources: Statistics Sweden and the Riksbank  Figure 9.

The core of the discussion is that house prices and lending sometimes develop in a way that does not appear sustainable – in a way that entails risks that are difficult to quantify or to even capture in analyses and forecasts. These are risks of events that often have a low probability of occurring, but if they do occur could have very serious consequences for the economy. So what is so special about asset prices rising and why do “bubbles” arise? Rising asset prices are not necessarily a bubble… The prices of many assets, such as houses or shares, rise and fall in cycles. And asset prices can rise substantially without this entailing an over-estimation or a financial bubble. A  BIS Review 70/2010  1  bubble is among other things based on speculation and a strongly over-optimistic view of the future. If, for instance, property prices increase substantially this may actually be justified on the basis of fundamental driving forces and realistic views of the future. Factors such as growth, incomes, construction and housing costs may develop favourably. And if one does not, for instance, build new housing at the same rate as the demand for housing increases, then it is not exactly surprising that the price of the existing housing should rise. Even if prices soar during a brief period, grey reality usually catches up before a bubble has arisen. When this happens prices usually adjust without any great drama and do not have any major effects on the rest of the economy.
Sunil Mendis: Creating a challenging and stimulating work environment New Year Message 2005 by Mr Sunil Mendis, Governor of the Central Bank of Sri Lanka, to all employees of the Central Bank of Sri Lanka, Colombo, 1 January 2005. *  *  *  I issue this traditional New Year message at a time when the whole of Sri Lanka has been engulfed by a national tragedy caused by “tsunamis” that hit the country on 26th December, 2004. I take this opportunity to express our deepest condolence to the members of the families of bank employees who have lost their lives and to our employees and their loved ones who have suffered by this calamity. At the same time, I wish to share the sorrows of those employees who have lost their property. Words are insufficient but hope that they would move forward from this tragedy. With the magnitude of the disaster, there is no question that our nation needs to be rebuilt. Hence, as employees of a state organization which is at the apex of the country’s financial system, we have an invaluable task to perform. In this context, I place my message before you with the plea that we take part in the nation-building task by offering our maximum efforts. I have been greatly encouraged by the positive response which all the employees have demonstrated towards the provision of relief to victims and rebuilding of the nation.

Applying our present scheme, monetary policy, coupled with a fiscal policy based on a structural balance sheet, has achieved its inflation objectives by dampening external and domestic shocks more strongly. The turbulences that in the past caused recessions in Chile, today are manifested only as changes in the pace of growth. To this end, monetary policy operates through several channels. Primarily, it regulates market liquidity and it sets, through open market operations, an interest rate for the provision of liquidity to the financial system at very short terms. By way of these two mechanisms it affects market interest rates, which are the ones that influence asset prices and economic agents’ decisions. The effectiveness of monetary policy therefore depends on the operation of these mechanisms at different levels. First, the Bank's ability to ensure the provision of liquidity is critical, as it maintains market interest rates aligned with the MPR. This is done regularly through open market operations and the Bank itself operates systems that allow these operations to be carried out with the appropriate standards. There may be cases where there is a sudden rise in market rates, because players in the system are faced with potential or actual liquidity constraints. Such a situation occurred in 2008, when events associated with the collapse of Lehman Brothers swept over the world economy. On that occasion, the Bank announced to the market that it would resort to exceptional liquidity provision mechanisms in pesos and dollars, which allowed local rates not to be altered, despite severe external risks.