samchain/econo-pairs-v1 huggingface dataset:
Proportion of actual and expected interest rate changes occurring in Inflation Report  (A) Actual changes Percentage of interest rate changes 100 90 80 70 60 50 40 one-third 30 20 10 0 1997-2000 2001-present whole period IR months Not IR months  (B) Expected changes Percentage of interest rate changes 100 90 80 70 60 50 40 one-third 30 20 10 0 1997-2000 2001-present whole period IR months Not IR months  What – if anything – should be read into the MPCs apparent change in behaviour? On the face of it, the evidence might suggest that the re-evaluation of the outlook undertaken during the quarterly forecast has become more influential. But there are a number of possible explanations. Most obviously, it could be a reflection of the shocks that have come along in the last 4 years. These may have required fewer changes in the policy rate than in the pre-2001 period. Alternatively, the required adjustments in rates might have been bigger in the early days, and if the MPC had an inclination to change rates in small steps, perhaps because it had good reasons for proceeding cautiously, then larger desired adjustments might have required more frequent changes: of the 16 changes in the first period, 7 were back-to-back, while in the second period, only 4 out of the 14 changes happened in consecutive meetings. The turnover in the Committee’s membership since 2000 might provide a different kind of explanation.

And that counts, both when it comes to organising the debate between nine experts, and when it comes to explaining the basis of policy to a non expert public. But forecasts are highly fallible, so our forecast centred approach to inflation targeting has gone hand in hand with a determined effort to illustrate the wide range of uncertainties around any central projection and a systematic attempt to factor the Committee’s own judgements about the risks into decision taking. That, for me, is a key reason for resisting recent calls by the IMF and others for the Bank to ‘publish numerical projections for a broader range of key variables’. Detail is seductive – but it can also be highly misleading, and a committee that spent its time debating the details of the forecast rather than using it as a tool to address big picture issues would be at risk of losing its way. Forecasts are indispensable – but they should be handled with care. 10  BIS Review 17/2005  Table 2. Interest rate surprises  A. Are rates changes evenly spread over the months of the year? Rate changes IR months non-IR months Whole period 1997-2000 2001-present  15 6 9  14 10 4  B. Are rates changes expected to be spread evenly over the months of the year?
Problems at the British Steel plant in the town have put at risk the jobs of 5,000 workers and a further 20,000 in its supply chain.1 Hopefully, a new buyer can be found and jobs in the town and beyond can be assured. This is the latest chapter in what has been a long and sometimes painful story for the UK steel industry recently. It has been a recurrent theme of my visits around the UK, including in Redcar and Port Talbot. The loss of signature industries can leave lasting social and economic scars – jobs lost, families disrupted, communities decimated. It is a pattern we see repeated across many industries in many advanced economies. It has been a key cause of the disaffection and disconnection felt by many and a potent polarising force in our politics, policies and societies. This polarisation is also a potent force shaping the fortunes of our economies, as I will go on to discuss. The travails of the steel industry lead me neatly to the issue I want to discuss today – jobs and pay. In the UK recently, this has been a good news/bad news story. The good news has been the new jobs created – the best jobs recovery in the UK since at least the Second World War. The bad news has been the subdued performance of pay over much of that period – the weakest pay performance the UK has experienced since at least the Boer War.

In a speech two weeks ago, British Prime Minister Gordon Brown proposed a new role for the IMF: “…its role should be to prevent crises and not simply manage or resolve them as in the past. And in a wider role the IMF, working with the global financial stability forum, should be at the heart of what we need – an early warning system involving regulators and supervisors in all countries for financial turbulence affecting the global economy.” 4  3  Financial Times January 26, 2008. 4  Speech at the Chamber of Commence in Delhi, 21 January 2008. BIS Review 14/2008  3  Obviously, there are pipelines that are not on our present maps. Also, our knowledge of what flows through the known ones is scarce. But would it help us if we knew? Would we be able to predict a looming crisis and thus prevent it? I do not have the answer to this, but I think it is fair to raise the question. We must expect turmoil in financial markets to occur from time to time. There will always be stupidity and greed, fear and euphoria (and some scoundrels). Accidents will happen. Authorities should strive to establish regulatory frameworks that give the right incentives for prudent behaviour. It is important to avoid overregulation that severely restricts markets and stifles innovation. We must of course make sure that obvious shortcomings in existing regulations are corrected.
Durmuş Yılmaz: Global crises and economic governance Speech by Mr Durmuş Yılmaz, Governor of the Central Bank of the Republic of Turkey, at the conference on “Global crises and economic governance”, İnönü University, Malatya, 15 April 2010. *  *  *  Distinguished Rector, Distinguished Academicians and Esteemed Guests, First of all, I would like to thank everyone who has contributed to the organization of this conference, primarily Prof. Cemil Çelik, the Rector of İnönü University and distinguished faculty members of the university. I take great pleasure in participating in such an event with you. I would like to start my speech with a brief evaluation of the global financial crisis. Later on, I will share with you my observations related to developments in the global economy and the Turkish economy. After presenting a brief overview of the monetary policy implemented and the measures taken by the Central Bank during the crisis, I would like to close my speech with the monetary policy exit strategy, which we announced to the public yesterday. As you know, problems that emerged in the US subprime mortgage market in the second half of 2007 spread the whole world to reach threatening levels for both financial and economic stability. We can say that the reaction of market players and the public has gone through four subsequent stages since the eruption of the crisis. These stages can be summarized as those of Denial, Disappointment, Panic and Hope.

In the first stage, the markets had difficulty perceiving the dimension of the damage caused by the crisis and considered that such an incident would be overcome shortly and/or would not reach significant levels. As a matter of fact, especially in the first half of 2008, one of the most discussed items on the agenda of international financial circles was whether there would be a decoupling of economies or not. In that period, many economists and market specialists supported the idea that the crisis that emerged in advanced economies would have a limited impact on emerging economies and that emerging economies had the capacity of compensating the global demand deficit, which was to be observed. In conclusion, they claimed that there would be a distinct decoupling in the growth dynamics of country groups. It has been fortunate that the expected decoupling has not been as intense as estimated. It is inevitable for both developed and emerging economies to be affected by global economic turbulence in a period characterized by the progressively rising interdependent nature of global economies. However, the scale of the impact has differed from one country to another. When we look back, we see that the resilience of countries in the face of the crisis has been determined mainly by four structural factors. It is possible to examine them under four headings as (1) Floating exchange rate regime (2) Resilience of the banking system (3) Countercyclical monetary policy and (4) Room for maneuver provided by the fiscal discipline implemented in the pre-crisis period.
Indeed, under the Alternative Story, there could well be challenges for monetary policy, which in its modern mode operates essentially by using Bank Rate to regulate aggregate demand relative to aggregate supply, exploiting a short-run trade off between growth and inflation so long as inflation expectations are well anchored. If aggregate supply were to become endogenous in the way I have described, the short-run trade off might well be less pronounced for a while. That would make it harder to judge inflationary pressures from gauging the amount of slack in the economy; and harder for the Bank to achieve our 2% inflation target by broadly steering demand conditions. In that scenario, it would matter enormously that wage and price setters continued to act on the basis that CPI inflation would remain in line with the 2% target over the medium term. For me, both the Orthodox and Alternative Stories are plausible. In that sense, I think the outlook is ‘bimodal’ – in terms of there being two main stories. The Orthodox Story, to which I gave most weight in my November vote, required a small tightening. The implications of the Alternative Story for policy were less clear. I concluded that it was essential for the MPC to act in a way that was most likely to keep inflation expectations anchored.

There are also rigidities in the economy that mean that it will take time before a sharp fall in exports can be replaced by an increase of exports or by an increase of domestic demand that fully compensates for this decline. I actually think it is more reasonable to concentrate the negative effect on potential GDP to the period immediately after the start of the financial crisis, rather than to spread it out over a larger number of years before and after the financial crisis in the way that both the HP trend and the PF approach do. This would mean that the GDP gap would not appear so high in 2008 and perhaps not so low in 2009 either. But this is unimportant for the assessment of resource utilisation this year. Resource utilisation is largely normal My assessment is thus that resource utilisation is largely normal. The measures of resource utilisation that I showed earlier in Figures 8 and 9 indicated this. But it is also supported by other measures of resource utilisation, based on questions to individuals and companies. An additional advantage of measures of this type is that they can be seen directly in the statistics, thus avoiding the problems associated with HP trends and PF approaches. Figure 11 shows such a measure, capacity utilisation in the manufacturing sector from Statistics Sweden (SCB). It is now more or less on the average level for the period 1996–2008.
Tarisa Watanagase: Thailand's weathering the global downturn Address by Dr Tarisa Watanagase, Governor of the Bank of Thailand, at a Luncheon with EU Ambassadors, Bangkok, 3 February 2009. *  *  *  Your Excellency Ambassador Hotek, Excellencies, Honourable Guests, Ladies and Gentlemen, I am delighted to join this luncheon gathering of prominent Ambassadors of the Council of European Union in Thailand, under the presidency of Ambassador Ivan Hotek of the Czech Republic. Indeed, I would like to extend my sincere appreciation to Ambassador Hotek for his kind invitation for me to update Excellencies from the EU countries on recent economic developments in Thailand and the prospects for 2009. Let me begin with the overview of Thailand's economic performance. The Thai economic performance was satisfactory for 2008 as a whole. GDP is estimated to grow by around 3.6 percent, driven by the growth momentum during the first three quarters of the year. Notably, from October 2008 onwards, economic developments have been deteriorating. During the fourth quarter of 2008, exports weakened considerably, falling by 9.4 percent from the same quarter of the previous year. Since October, exports showed large reduction in manufacturing products, especially high-technology products. On the domestic side, demand as well as consumers' and investors' confidence have deteriorated as evidenced by several indicators reported by the Bank of Thailand, including the Business Sentiment Index, which fell to the lowest level at 34.4 in November last year.

Growth is concentrated in the largest cities like New York and San Francisco, and those who benefit the most are those who already have high incomes.2 A large part of this is because current economic conditions favor highly skilled workers who tend to flock to cities. These big metropolitan areas are successful, but they also suffer from some of the starkest wage inequality in the country. By contrast, upstate New York is less unequal, but the disappearance of manufacturing jobs has held back growth. More equal wage growth is only good news if people have jobs. But many have found themselves in the position of leaving the area in which they grew up to look for work. The Albany area has bucked this trend. The mix of colleges and universities specializing in innovative subjects like nanotechnology, and high-tech businesses, alongside its position as a state capital, has created a real economic success story. I know there are a lot of students in the room, and choosing SUNY was a wise move. Investing in an education that equips you for the future will pay off over the long term. The Tale of Many Economies So what can the Fed do about this complex picture—the tale of many economies I’ve talked about today? 2/3  BIS central bankers' speeches  Monetary policy is an important tool, but it alone cannot address all the economic issues that we face.
The new method, where one follows the prices on a top list for books sold, probably gives greater variations than the old method where one followed the prices on a number of indicator books. The top list changes every month, while the indicator list changed less often. Sales are now captured to a greater extent than before. 27 Foreign air travel was not included in Table 1, but a new method of measuring prices has contributed to a new seasonal pattern with a higher volatility in recent years. 14 [19]  Underlying measures and actual monetary policy The different measures of underlying inflation give us the opportunity to approach the existing data and view it from different angles. But in the next step, the measures will be used by policymakers responsible for monetary policy. Here a conflict arises between on the one hand bringing forward various underlying measures and on the other hand being clear and transparent about the objective of monetary policy. The conflict become particularly clear if one chooses to use measures of underlying inflation that systematically deviate from the actual rate of inflation. Or, in other words, the poorer the measure of underlying measure of inflation, the greater the communication challenges. I would say that we have seen clear examples of this conflict in recent years: In June 2018, analysts at Handelsbanken Capital Markets considered it necessary to deny that the Riksbank had changed its target variable in a newsletter.

6 The Bank of England set out in its July 2019 FSR its intention to test the UK financial system’s resilience to the physical and transition risks of climate change. It will gather views on the design of the exercise and, as a first step, will publish a discussion paper in autumn 2019. More information available at: https://www.bankofengland.co.uk/-/media/boe/files/financial-stability-report/2019/july-2019.pdf. 3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  Such “tilt” investment strategies, which overweight high environmental, social and governance (ESG) stocks, and “momentum” investment strategies, which focus on companies that have improved their ESG rating, have outperformed global benchmarks for close to a decade.7 The mainstreaming of such strategies and the tools to pursue them are essential. At present, one of the biggest hurdles to doing so is the inconsistent measurement of ESG. We need a common taxonomy to help financial markets rigorously identify environmental outperformance and to direct investment accordingly. The EU’s Green Taxonomy and the Green Bond Standard are good starts, but they are binary (dark green or brown). Mainstreaming sustainable investing will require a richer taxonomy – 50 shades of green. One promising option, highlighted in this week’s initiative of UN’s Climate Financial Leaders, is the development of transition indices composed of corporations in high-carbon sectors that have adopted lowcarbon strategies.8 Such approaches are essential for our citizens to make sure their money is invested in line with their values.
Competitiveness is determined by the intrinsic efficiency of the economy, which is in turn the result of investment, productivity, structural evolution, and so on; these may in turn be amenable to influence by government policy in various fields, but the role of monetary policy is to provide a stable monetary environment within which those longer-term forces can operate most propitiously, and not itself to attempt short-term fine-tuning. There is one further aspect of this debate which I should like to address, since it seems to be the focus of increasing attention. It is the issue of what should or should not be done with the Hong Kong dollar, were the renminbi to move more flexibly against the US dollar, and, more particularly, whether we should consider pegging the Hong Kong dollar to the renminbi. Adjustment of competitiveness Prices in Hong Kong are observed to be flexible in both directions in response to market forces. One of these forces is the influence of competing prices from the Mainland; our research indicates that there is a gradual process of convergence at work (which includes rises in prices across the border as well as falls in Hong Kong), although this may be weaker than some observers claim and certainly 3 does not mean that prices will or should eventually equalise completely. Moreover, prices of tradables in Hong Kong are found to be particularly adept at adjusting to movements in the effective exchange rate.

Three factors of uncertainty come into the picture: -  first, there is by essence a high degree of uncertainty surrounding the assessment of misalignments, related to their equilibrium prices and the channels of transmission to the real economy;  -  second, central banks have to keep in mind the balance of risks facing the economy: a monetary policy action that would reduce the risk of a large loss in the future might be very costly for the economy in the short run;  -  third, the effects of monetary policy decisions on asset prices are very uncertain. •  The announcement of a systematic reaction could therefore lead to moral hazard and undermine the central bank’s anti-inflationist credibility, which is its most precious asset. Moreover, the single interest rate policy cannot be geared simultaneously towards two potentially conflicting objectives. c.  Be aggressive or experiment  There may be two cases where gradualism is not the systematic guideline. •  Worst-case outcomes may best be prevented by following policy rules that are rather aggressive in responding to inflation deviations from target. •  A more aggressive policy rule may generate more information, which would improve the learning of the central bank and thereby future policy performance. But the learning process might be costly since it could generate increased volatility. 2. Some approaches to address uncertainty  a. Rely on monetary policy rules  •  Simple monetary policy rules (like the Taylor rule) may perform well in many different models.
In January, however, survey respondents were asked to assign probabilities to rate outcomes at the end of 2017 and 2018 conditional on two different scenarios: “returning to the zero lower bound (ZLB) at some point in 2016–2018,” or “not returning to the ZLB at any point during 2016–2018.” Respondents were also asked for their subjective view of the probability of each scenario, a topic that I will discuss later. We changed the survey both  42  This is the case for some of the variables of interest, such as the level of the policy rate or, in the past, the projected level of the balance sheet. 43  As noted earlier, questions that elicit a “most likely” value, or mode, can be difficult to interpret. This is particularly true of questions about the path of a variable, for example, the federal funds rate. If respondents are asked for their modal path, then technically, they should give the mode of the joint distribution. For example, the “mode” for policy rate projections could be the mode across all paths that the federal funds rate could follow from 2016 to 2018. It is an open question whether survey participants respond in this way, or respond with the mode of each marginal distribution. 44  A number of explanations are in order. The survey asks for probabilities (marginal distributions) associated with bins for the federal funds rate.

In both the SPD and the SMP, many of the questions are tailored toward matters that are of policy relevance at the time of the survey. Further, we use the fact that the respondents are market professionals with a good understanding of finance and economics to ask direct and at times technically complex questions. In this regard, the surveys contrast with the SCE, which uses language that is accessible to respondents with no economic or financial training.41  37  See Armantier et al. (2016). 38  Using a standard test of the difference between two distributions, the change from September to January is significant at the 1 percent level. The change from April to May has a “p-value” of 16 percent. 39  This dispersion implies that random samples of small size (less than one thousand) will exhibit variability even if the underlying population distribution of inflation expectations remains constant. 40  Correia-Golay, Friedman, and McMorrow (2013) provide an introduction to the SPD. 41  Many surveys of market participants do not use their technical sophistication to the extent necessary to produce robust measurement of expectations. For example, currently many surveys ask market participants to identify the FOMC meeting at which the next increase in the fed funds target range will most likely occur. This question implicitly assumes that the next rate change will be an increase; moreover, eliciting expectations about the most likely meeting when the number of future meetings is large is particularly uninformative.