samchain/econo-pairs-v1 huggingface dataset:
Chart 5: Inflation Report forecasts of wage growth from 2012 Four-quarter wage growth (per cent)  8 6 4 2 0 -2 -4  2001  2003  2005  2007  2009  2011  2013  2015  2017  Data Source: ONS, Bank of England and Bank calculations Note: Chart shows realised four-quarter whole economy wage growth and vintages of May Inflation Report forecasts from 2012 to 2017. 20  All speeches are available online at www.bankofengland.co.uk/speeches  20  Chart 6: UK Phillips curve Wage inflation (%)  40 35 30 25 20 15 10 5 0 -5  0  2  4  6 8 Unemployment rate (%)  10  12  1971-1997  1998-2012  2013-2018q2  Fitted 1971-1997  Fitted 1998-2012  Fitted 2013-2018q2  14  Sources: ONS and Bank calculations  Chart 7: US Phillips curve Wage inflation (%) 10 8 6 4 2 0 0  2  4  1971-1982 Fitted 1971-1982  6  8  Unemployment rate (%) 1983-2011 Fitted 1983-2011  10  12  2012-2018Q2 Fitted 2012-2018Q2  Sources: FRED and Bank calculations. Notes: The measure of wages used is four-quarter growth rate of total private average hourly earnings of production and nonsupervisory employees.

29  All speeches are available online at www.bankofengland.co.uk/speeches  29  Chart 24: Distribution of pay packets  Percentage of employees 50  40  30  2018  20  2017 10  0 <0  0  >0 & <1  1  >1 to <=2  >2 to <= 3  >3 to <=4  >4 to <=5  >5  Settlement by bucket (per cent)  Sources: Bank of England, Incomes Data Research, XpertHR, Incomes Data Service, Labour Research Department and Bank calculations.
As I mentioned earlier, a low and stable rate of inflation normally means that the economy is continuing to expand in accordance with its long-term potential. One cannot be certain, however, that the repo rate hike since November will suffice to bring about such an adjustment of the path for economic growth. The impact on demand from monetary policy is probably still stimulatory. But the repo rate that represents a more neutral monetary policy impact cannot be specified exactly. We simply do not know enough about this. Besides which, the level probably varies over time. 3  BIS Review 13/2000  Empirical guidance can be derived from countries that are ahead of Sweden in the business cycle. The action of the US Federal Reserve, for example, illustrates the economic advantage of a forward-looking approach that raises the interest rate for a gradual reduction of monetary stimulation. The Fed began a series of increases in the instrumental rate in February 1994, from a level of 3%, and then adjusted the rate within a more normal range of 4.5-6%. This served to prevent an acceleration of inflation without plunging the economy into a recession. On the contrary, the US economy is now experiencing the post-war era’s longest upward phase. While other factors besides monetary policy have, of course, contributed to this, the American example does show that a judicious upward adjustment of the interest rate definitely can contribute to good economic effects provided the sustainability of growth is also taken into account.

Therefore, the existing rules should be applied, and they should not be stretched to a point where they would lose their credibility. There is built-in flexibility in the Stability and Growth Pact to account for the cost of major structural reforms – but it cannot be based on empty promises. The sequencing should be clear. First, reforms need to be adopted and implemented. Then,  3  Euro area GDP is expected to recover at a pace of 1% in 2014 and 1.7% in 2015 according to the latest ECB staff projections. 4  Total investment in the euro area has shrunk by almost 20% since the peak in economic activity in 2008. In addition, total factor productivity has also been disappointing in the euro area since 2000: it grew by 0.45% annually from 2000 to 2007 before receding by 0.47% annually between 2007 and 2012 (source: Ameco database, European Commission). 5  See Barroso, J.M., “Remarks by President Barroso on the Country Specific Recommendations 2014”, speech given in Brussels on 2 June 2014. BIS central bankers’ speeches  3  the cost of such a reform, independently assessed, could be taken into account under the Stability and Growth Pact, with due attention to the limited fiscal space provided by the high debt levels. Economic stability is a necessary condition for growth, but is not sufficient alone. For our economies to grow out of high debt and unemployment, and thereby ensure social stability, we need to do more.
This not only created a dynamic towards further integration, but also resulted in a growing realisation that a truly single European market could not be created while currency fluctuations and the exchange rate risk continued to create de facto barriers to trade. Then, in 1989, the collapse of the communist regimes in Eastern Europe and the fall of the Berlin Wall provided Europe’s leaders with an opportunity to shape the Europe of the future in ways that had been unimaginable before. If the completion of the single market project and the fall of the Berlin Wall created the necessary dynamics, the changing economic environment and, with it, the growing economic policy consensus removed, at the same time, many of the obstacles that had previously stood in the way of European Monetary Union. Increased international capital flows and the removal of restrictions on cross-border capital movements made it virtually impossible for individual Member States to pursue truly independent monetary policies without this resulting in destabilising capital flows and, ultimately, a reversal of policy. Moreover, it had, in any case, come to be universally accepted that monetary policy could not be used successfully to stimulate economic growth, but should instead focus on maintaining stable prices, thereby also creating an appropriate climate for sustainable growth. Since it was now considered neither possible nor desirable for individual countries to pursue significantly diverging monetary policies, both the real and the perceived losses that might result from relinquishing monetary policy sovereignty and adopting a single currency had been significantly reduced.

Durmus Yılmaz: Central bank achievements and opportunities in Turkey Speech by Mr Durmus Yılmaz, Governor of the Central Bank of the Republic of Turkey, to members of the press at the Central Bank of the Republic of Turkey, Ankara, 18 April 2006. *  *  *  Dear Press Members, I have been appointed Governor of the Central Bank, which was vacated by Former Governor Mr. Süreyya Serdengeçti due to his retirement after having completed his five-year term on 14 March 2006 at the end of the business hours, and which has been filled temporarily by Dr. Erdem Basçı as Acting Governor since then. I have worked in various positions of the Central Bank of the Republic of Turkey since 1980. As you have been closely following, many achievements have been made since then, especially in the last couple of years, that will always be remembered as the turning points in our economic history. Distinguished members of the press, As a result of the legal amendments made in 2001, the greatest achievement in the area of monetary policy has been the attainment of the “Central Bank Independence”. Accordingly; “The Bank shall, with the objective to achieve and maintain price stability, be authorized to utilize monetary policy instruments described in this Law and shall also be authorized to directly determine and implement other monetary policy instruments that it deems appropriate.” as expressed in the Law on the Central Bank. Such an authorization is called “instrument independence” in the modern economic literature.
For example, similar effects of diversity have been found in studies of the resilience of crops to pathogen outbreaks; in the robustness of savannas and grassland to drought; and in morbidity and mortality rates among humans facing disease and infection. 21 Diversity of the gene pool, it seems, improves durability. The financial system has mirrored the fortunes of the fisheries, for many of the same reasons. Since the start of 2007, 23 of the largest European and US banks have seen their market capitalisation fall by 90% or more – the fisheries equivalent of collapse. But what took marine eco-systems two hundred years to achieve has been delivered by financial engineers in two. In explaining the collapse in fish and finance, lack of diversity seems to be a common denominator. Within the financial sector, diversity appears to have been reduced for two separate, but related, reasons: the pursuit of return; and the management of risk. The pursuit of yield resulted in a return on equity race among all types of financial firm. As they collectively migrated to high-yield activities, business strategies came to be replicated across the financial sector. Imitation became the sincerest form of flattery. So savings cooperatives transformed themselves into private commercial banks. Commercial banks ventured into investment banking. Investment banks developed in-house hedge funds through large proprietary trading desks. Funds of hedge funds competed with traditional investment funds. And investment funds – pension, money market mutual, insurance – imported the risk the others were shedding.

This of course can be a bit easier for countries with flexible exchange rates, which can achieve it by nominal depreciation (and thus risk rise in inflation). However, countries with fixed rates are sometimes forced to abandon their exchange rate regime, as they do not have any other way out of real overvaluation of their currencies. Another risk in the short term might be the contagion of financial crises from abroad, which would combine with fragilities and thus prompt financial and economic difficulties in these countries. The long-run challenges for transition countries are related to the simultaneous maintenance of competitiveness and nominal convergence. What is next for the new EU member states is certainly achieving EMU membership and all of them agree that the stability and opportunities of the single currency are their goal. While achieving this seemed easier a few years ago, the prospects are somewhat worsened in the light of the recent developments. The record high oil prices and the high food prices additionally augmented the inflationary pressures in these countries. The high inflation in most of the transition countries makes them breach the first of the four Maastricht criteria. What is even worse, the forecasts for the next several years for most of the countries show they will probably not meet the  10  Source: EBRD Transition report 2007: November update and NBRM calculations. Data for 2007 are estimates. 11  Source: EBRD Transition report 2007: November update. Data for 2007 are estimates. 4  BIS Review 74/2008  inflation criterion.
This is because there is normally uncertainty attached to the situation in the economy, disturbances to which the economy may be exposed and how fast an interest rate change influences price inflation. But we will not always take a gradualist approach. A rapid and pronounced change in the interest rate is appropriate if, for example, heightening turbulence in financial markets or a cost-push shock resulting from negotiations indicates that confidence in monetary policy is in jeopardy. Norges Bank analyses the inflation outlook in its Inflation Report, which is published three times a year. Further assessments are presented every sixth week in connection with the Executive Board's monetary policy meetings. It is, as mentioned, the inflation outlook two years ahead that determines the interest rate set by Norges Bank. If special circumstances prompt Norges Bank to apply a different time horizon, the Bank will provide an assessment of this. The same applies should special emphasis be placed on developments in financial markets and property markets. Today's inflation rate is partly the result of the interest rate that was set one to two years ago. Current inflation figures do not provide an adequate basis for determining the level at which interest rates should be set today. Monthly figures for the consumer price index are also influenced by random and temporary factors that have little impact on developments in inflation over time. Precipitation levels have an effect on electricity prices. Changes in indirect taxes have an immediate impact on the consumer price index.

3/4  BIS - Central bankers' speeches  5 BBM are implemented in Romania, Czech Republic, Slovakia, Hungary, Poland,  Slovenia. 4/4  BIS - Central bankers' speeches
The Time axis denotes the date of the forecast. Sources: The Riksbank, Nordbanken, Handelsbanken, S-E-banken, Swedbank, National Institute of Economic Research, Ministry of Finance, Trade Union Confederation, Confederation of Professional Employees, Wholesale and Resale Research Institute, Hagström & Qviberg, Aragon, Swedish Post, Unibank and Matteus Fondkommission  BIS Review 47/1998

When we consider the interest rates that are most important for households and businesses – i.e., longer-term real interest rates rather than the rates decided directly by the Bank – it is also important to realise to what extent monetary policy can affect those rates. The answer to this is that monetary policy only has a short-term impact on long-run real rates that are ultimately determined by underlying economic fundamentals, not least the interactions between the propensity to save and the impetus to invest. Let us now examine a few facts of importance in this context. First, it should be noted that international long-term real rates have been falling over the past three decades, as can be seen in Chart 1. 2  Chart 1: Real long-term Treasury rates on price indexed bonds 1985-2016 %  1985  1990 2015  1995  2000  2005  — International interest  2010  —Iceland  Rates on indexed long-term Treasury bonds (5-10 years). International interest rates are the simple average of rates for the US (from 1999), the UK, and Germany. The Icelandic data are compiled from data on initial offerings of Treasury savings bonds and yields on Housing Financing Fund bonds and indexed Treasury bonds. The figure from 2016 is the average through mid-November. Sources: Bank of England, US Federal Reserve Bank, Central Bank of Iceland. This development began long before the financial crisis.
It stated that it would enforce this minimum rate with the utmost determination and was prepared to buy foreign currency in unlimited quantities for this purpose. This policy is still in force, without any restriction. The impact on the Swiss economy of the deterioration in the international environment as well as the exchange rate movements in July and August had been steadily increasing. Economic activity weakened significantly over the course of 2011 and the pressure on profit margins intensified further in many industries. However, in the past few months there have been growing signs that the economic situation in Switzerland has stabilised as a result of the minimum exchange rate. Thus the minimum exchange rate of CHF 1.20 per euro has, to date, proved to be effective. It has reduced the very substantial overvaluation of the Swiss franc. Moreover, the extreme exchange rate fluctuations which had been experienced previously have been lessened. This has given business leaders a better basis for planning, thereby clearly limiting the damage inflicted by the appreciation of the Swiss franc on the real economy. However, apart from the exchange rate, future economic growth in our country will once again depend on developments in the international economy. That is why I will now present to you our assessment of the international economic outlook. Economic outlook and outlook for price stability The latest economic statistics suggest that the international economic recovery will continue, although growth rates are likely to be on the low side by comparison with typical recovery phases.

In doing so, we take account of the development of the economy and make a contribution to the stability of the financial system. The SNB pursues a monetary policy that serves the interests of the country as a whole, and we fulfil this mandate as an independent central bank. To do this, we continue to rely on the total commitment of our staff, whom I would like to thank – also in the name of my colleague,  4  BIS central bankers’ speeches  Jean-Pierre Danthine – for their hard work and their solidarity with the SNB. We thank our shareholders for their continuing support. And we thank you all for taking such a great interest in the activities of the SNB. Finally, we would also like to thank our former colleague and Chairman of the SNB Governing Board, Philipp Hildebrand, for the good collaboration we enjoyed over the years. We very much regret his resignation and the circumstances leading up to it. Thank you for your attention. BIS central bankers’ speeches  5
The part of household consumption that takes place in Swedish markets exposed to competition has 6 increased during the 1990s – from 25 per cent in 1991 to 32 per cent in 1999. However, this level is still below the EU, where 46 per cent of consumption is in markets exposed to competition. A number of different markets have been opened up to competition over the past ten years and Sweden is in many aspects a model for other countries to follow. Examples of markets that have been exposed to competition are the electricity market, post and telecommunications, the capital and foreign exchange market and a large part of the transport sector. The main areas where competitive pressure in Sweden is tangibly lower than in the EU and prices are higher are the food and housing sectors (and the construction sector). Swedish food prices are just over 20 per cent higher than in the rest of the EU, 7 while housing is around 35 per cent more expensive. These areas of expenditure together comprise more than ¼ of the CPI basket and are also responsible for a large part of low income earners' total expenditure. The absence of competition in the greater part of the public sector, which constitutes approximately 30 per cent of the Swedish economy, entails both a risk of lower efficiency and that a significant part of the economy is not offered alternatives in the form of new business ventures with the growth and th flexibility that small companies can offer.

Percentage points 30  28  30 21 21  20 10  18  20 5  10 2  2  0  0  0  0 -3  -10  -3  -10 -14  -20  -17  -20  -20 -26  -30 S  DK FIN UK IRL D  F  B  Note. SV=Sweden, DK=Denmark, FIN=Finland, UK=United Kingdom, IRL=Ireland, D=Germany, F=France, B=Belgium, A=Austria, L=Luxembourg, NL=Netherlands, I=Italy, E=Spain, EL=Greece, P=Portugal. A  L  NL  I  E  EL  -30  P  Source: Eurostat. The fact that there exist price differences between countries is partly due to structural factors. One important factor is the income level (richer countries usually have higher prices). Taxes, wages, population density and changes in the exchange rate are also of considerable significance. Sweden has, for instance, higher VAT and unit labour costs, i.e. payroll expense including social security contributions adjusted for productivity, than the EU average. Sweden’s geographical situation and the fact that we are a sparsely-populated country mean that we are also affected by higher transport costs, lower economies of scale and thereby have higher prices. It is estimated that approximately one half of the Swedish price level difference from the EU average 5 can be explained by structural factors. The other half is attributed to a lack of competition. Calculated in krona, this means that a family with two children pays approximately SEK 30,000 more a year for their purchases than they would otherwise.
Ball, L. and N. Sheridan (2005), “Does Inflation Targeting Matter?” in B. Bernanke and M. Woodford (eds. ), The Inflation-Targeting Debate, University of Chicago Press. Blanchard, O. and J. Gali (2007), “The Macroeconomic Effects of Oil Price Shocks: Why are the 2000s so different from the 1970s?” Working Paper Series N°13368, NBER. Blanchard, O. and J. Simon (2001), “The Long and Large Decline in US Output Volatility,” Brookings Papers on Economic Activity, (1) pp. 135-164. Bernanke, B. (2004), “The Great Moderation”, remarks by the Governor at the meetings of the Eastern Economic Association, Washington, DC. Betancour, C., J. De Gregorio and J. Medina (2008), “The Great Moderation and the Monetary Transmission Mechanism in Chile,” BIS Papers No. 35, Bank of International Settlements, pp. 159-178. Cavallo, E. (2007), “Output Volatility and Openness to Trade: A Reassessment”, Working Paper No.604, Inter-American Development Bank. Cecchetti, S., A. Flores-Lagunes, and S. Krause (2005), “Sources of Changes in the Volatility of Real Growth,” in C. Kent and D. Norman (eds. ), The Changing Nature of the Business Cycle, Proceedings of a Conference held at the H. C. Coombs Centre for Financial Studies, Reserve Bank of Australia. De Gregorio, J. (2007), “Defining Inflation Targets, the Policy Horizon and the OutputInflation Tradeoff,” Working Paper N°415, Central Bank of Chile. De Gregorio, J., O. Landerretche and C. Neilson (2007), “Another Pass-Through Bites the Dust? Oil Prices and Inflation,” Economía, Volume 7, Number 2, Spring, pp. 155-196.

Galí, J. and L. Gambetti (2007), “On the Sources of the Great Moderation,” Economics Working Papers N° 1041, Universitat Pompeu Fabra. 6  BIS Review 74/2008  Gerlach, S., A. Giovannini, C. Tile and J Viñals (2008), Low Inflation: Testing Times for Central Banks, Geneva Report on the World Economy 10. Gonçalves, C. and J. Salles (2008), “Inflation targeting in emerging economies: What do the data say?” Journal of Development Economics 85, pp. 312–318. Hyvonen, M. (2004), “Inflation convergence across countries”, Discussion Paper N°2004-04, Reserve Bank of Australia. Kent, C., K. Smith and J. Holloway (2005), “Declining Output Volatility: What Role for Structural Change?” in C. Kent and D. Norman (eds. ), The Changing Nature of the Business Cycle, Proceedings of a Conference held at the H. C. Coombs Centre for Financial Studies, Reserve Bank of Australia. Kim, C.-J. and C. Nelson (1999), “Has the U.S. Economy Become More Stable? A Bayesian Approach Based on a Markov Switching Model of the Business Cycle,” The Review of Economics and Statistics 81 (4) pp. 608-616. McConnell, M, and G. Perez-Quiros (2000), “Output Fluctuations in the United States: What Has Changed since the 1980s?” American Economic Review 90(5), pp. 1464-1476. Mishkin, F. and K. Schmidt-Hebbel (2007), “Does Inflation Targeting Make a Difference?” in F. Mishkin and K. Schmidt-Hebbel (eds. ), Monetary Policy under Inflation Targeting, Central Bank of Chile, pp. 291-372. Stock, J. and M. Watson (2003), “Has the Business Cycle Changed? Evidence and Explanations,” in Monetary Policy and Uncertainty: Adapting to a Changing Economy, pp.