samchain/econo-pairs-v1 huggingface dataset:
Second there is a long-standing convention that the MPC only factors announced fiscal policy into its forecasts and actions. With those two points in mind I want to distinguish between two types of fiscal news over the last month; those that the MPC has factored in to its decisions already and those that it has yet to. In the first category on 8 September the government announced the Energy Price Guarantee scheme which will cap energy bills to £ for the typical household and for businesses. The Guarantee will therefore insulate households and businesses and the broader economy from  the direct impacts of further shocks to energy prices. As such it represents another very significant fiscal intervention, which can be thought as a shock which supports demand relative to what it would otherwise have been. The MPC was able to take account of the Guarantee, based on an initial assessment of its impact, at its September meeting. In the second category of fiscal news which the MPC has not yet incorporated, on 23 September the Government announced its Growth Plan which contained a range of fiscal measures, particularly on the tax side. The Government has followed this up with further policy announcements, and has also set out that it will publish its Fiscal Plan on 23 November, alongside an updated forecast from the Office for Budget Responsibility.

The picture you get is of successive upwards revisions to inflation and successive downwards revisions to growth, with the energy price shock the principal driver of both (Chart 7). By the time of the August 2022 MPR, the MPC was forecasting a recession starting in the current quarter and lasting throughout 2023, with a peak to trough fall of GDP of 2.1%. But because the fiscal and financial markets shocks post-date the most recent forecast it wouldn’t make sense to extrapolate this trend of forecast revisions forward as a starting point for our November forecasts. Chart 7: MPC’s inflation forecasts and MPC’s annual GDP growth forecasts  Sources: ONS and Bank calculations. In the August MPR we had already noted that that the risks around our projections from both external and domestic factors were exceptionally large, given the very large rise in wholesale gas prices and the consequent impacts on real incomes for households and on inflation. The MPC’s initial assessment of the Energy Price Guarantee, first made at the time of the September MPC, is that it will significantly reduce the degree of uncertainty around the outlook for UK retail energy prices over the period of the Guarantee and therefore also for CPI inflation. As a result the Guarantee means that CPI inflation is expected to rise by less in the near term, peaking at a little under 11% in October, lowering and bringing forward the expected peak in inflation, relative to the MPC’s August forecast.
Stefan Ingves: The Riksbank and the Swedish economy Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, to the Swedish Association of Local Authorities and Regions, Tylösand, 28 May 2007. *  *  *  Introduction Firstly, thank you for the invitation to come and speak to this assembly. Today I will talk about my views on the role of the Riksbank and about the current monetary policy situation, roughly as expressed in the discussion at the May monetary policy meeting. International economic activity remains good Sweden is a very open economy and large parts of the business sector are dependent on being able to sell their products to customers abroad. If the economies in countries around us are doing well, then the Swedish economy also does well. In recent years global growth has been extremely high. We believe that the growth rate will slow down slightly in 2007 and 2008, but will nevertheless remain high. After many years of high growth the US economy has now entered a slowdown phase. Economic activity has been dampened above all in the housing sector, but also in the manufacturing industry. Productivity growth is lower. The earlier upturn in house prices has slowed down and residential construction has declined. The problems have been aggravated by the fact that it has been easy for people with low incomes to obtain large loans for housing. As yet the problems in the housing market do not appear to have spread to the rest of the economy.

There are a number of other, similarly key, requirements in the guidance which I will not detail here – for example the need for a responsible and accountable legal entity behind the operation and for governance arrangements which allow for timely human intervention, ensuring that expert judgement and decision making is available to deal with unforeseen circumstances. The guidance also provides considerations for what should be considered systemically important in this context, though I should note that all payment systems are encouraged to observe the PFMI. The point is that in this one area of the financial system, systemic payments, we are engaged in the work to deliver “same risk, same regulatory outcome”. Stablecoins used primarily for payment are just one element of the crypto- ecosystem. For the ‘same risk, same regulatory outcome’ approach to be effective, it needs to be carried forward across international standards and those standards need to be incorporated into domestic regulatory regimes. Similar work is also in train in other areas. The Basel Committee on Banking Standards is in the process of issuing guidance on the prudential treatment of cryptoassets held by banks[6]. IOSCO is looking at the application of the standards for investor protection and market integrity across cryptoassets, exchanges and platforms for lending and trading[7]. These international standard setting bodies are working closely together on stablecoins to ensure we understand how we treat  Page 7  similar risks in different regulatory regimes and how the regimes might interact with each other.
As we were making the key rate decision in February, the Finance Ministry was then yet to launch its forex operations as part of the budget rule. It was difficult to gauge the envisaged impact of such operations. The Finance Ministry-conducted purchases of foreign currency could have fomented a short-term deterioration in exchange rate and inflation expectations. Given a number of risks including these, we toughened our rhetoric at the time. To date we see that the foreign currency market has remained steady. The impact of these operations on the ruble exchange rate was immaterial if its strengthening factors prevailed. Fourth, the updates to the outlook are mainly related to 2017, with the mid-term prospects for economic development unchanged. A conservative approach to the baseline scenario assumes oil prices to drop to $ a barrel by the end of 2017. In this case, the average annual oil price will hold near $ in 2017, that is, well above the previous scenario’s assumptions. It would be difficult at this point to make a definitive forecast as regards the potential extension, in the middle of the year, of oil producers’ output cut deal. This is indeed an uncertainty factor. Oil prices may also be under downward pressure coming from rising outputs of shale oil, as well as a potentially stronger dollar on the back of the US Fed rate rise.

An economy being a living organism, it is only natural for inflation to hover around 4%, that is, slightly higher or slightly lower on any given day. This figure may appear as early as this year. This is a completely normal situation, without any indication of risk whatsoever. This is the way it should be. Risks may emerge only if we see either a substantial or lengthy deviation in the rate of inflation in either direction from the 4% target. 4 / 14  BIS central bankers' speeches  You will recall that in the early days of inflation targeting this range was defined as 4% plus or minus 1.5 percentage points. We rejected this range, for the following reason: we did this because both analysts and market players were of the opinion that we were aiming for a point outside the middle of this band, with expectations tending towards its upper limit. We decided to put the plug on this scheme and make known our intentions to ensure a sustainable downward movement in the rate of inflation towards the target. However, we leave open the possibility for this variation range to be reinstated once we have hit our 4% inflation target. Such a range exists in many economies, and it is open to variation. I think this issue will be on our agenda this autumn as we develop our Monetary Policy Guidelines; at this time we will look into the need for this range and its potential impact on our communication policy. Thank you.
4 Among the key lessons are: •  the critical importance of liquidity, alongside capital, in managing and regulating banks;  •  the limitations of the models which underpin the valuation and rating of structured products;  •  the importance of disclosure on risk exposures and valuation practices for the maintenance of confidence and effective market functioning in times of stress;  •  the need to alter the adverse incentives that had developed in the distribution chain for mortgages including for originators to maximise the volume of loans, for the  2  Arguably the cash flow projection of losses of $ billion comes closest to the sort of provisions banks would be making if the loans had been held on their banking books rather than securitised and sold on. On that basis the losses currently projected would be only 50% of the Savings and Loans losses as a share of US GDP. 3  See “Financial stability and depositor protection: strengthening the framework”, Consultation Document, January 2008. http://www.bankofengland.co.uk/publications/financialstabilityanddepositorprotection080130.pdf  4  Private sector initiatives have also been launched. There are European industry plans to compile information on a variety of instruments including ABCP, ABS and CDO and to disseminate this to investors and other interested parties on a regular basis. See “Summary of European Industry Commitments to the European Commission regarding Transparency in the European Securitisation Market” (www.europeansecuritisation.com/Industry-letter-08Feb08.pdf). The Institute of International Finance (IIF) also has an active agenda of work, covering risk management, liquidity, valuation, ratings, and transparency. (See http://www.iif.com/press/press+releases+2007/press+46.php).

BIS Review 24/2008  3  rating agencies to expand their scope as widely as possible, and for banks to use off-balance-sheet vehicles; and •  improving crisis management arrangements, including the process for providing liquidity to institutions under stress and for restructuring weak and failing banks. Measuring and adjusting for risk The focus of this work is the recent structural changes in banking and credit markets and ways to prevent those making the financial system more prone or less resilient to large cyclical swings. That is important. But we have been here before. It is not so long since a vast amount of work was set in train in the wake of the LTCM crisis in 1998 and again after the dotcom boom blew out. While each crisis has its own idiosyncrasies there are common elements and they too need to be addressed. In my view the key lies in the measurement of risk and the repeated inclination to underprice risks at the top of the cycle and thus take comfort from exaggerated estimates of risk adjusted returns; and the corollary, a tendency to overprice risk as the cycle swings down.
However, there are many types of shock where there is no conflict between stable nominal developments and stable developments in the real economy. For example, a sharp decline in overall demand may give rise to a deflationary recession. In such a situation, an expansionary monetary policy may contribute to both nominal and real economic stability. Whether disturbances arise on the supply side or the demand side, it should be possible to use the interest rate to influence economic developments. The interest rate is an instrument, rather than a target variable. A passive monetary policy will lead to both price and exchange rate instability and to greater fluctuations in production and employment. However, an active monetary policy does not imply attempting to fine-tune economic developments. We must be mindful of the uncertainty associated with economic developments and the effects of monetary policy. Normally, interest rate changes should be made gradually to allow us to acquire more information, for example about the effects of previous interest rate changes. 2  BIS Review 7/2001  Uncertainty and credibility According to Norges Bank's mandate, monetary policy is to be aimed at maintaining a stable krone exchange rate against European currencies, based on the range of the exchange rate maintained since the krone was floated on 10 December 1992. In the event of significant changes in the exchange rate, monetary policy instruments will be oriented with a view to returning the exchange rate over time to its initial range.

On the contrary, government debt is a vital ingredient of modern monetary policy. A liquid market for government bonds is a prerequisite for a modern and efficient financial market. Functioning financial markets, in turn, are necessary for an efficient monetary policy: a liquid market for governments bonds enhances the efficiency of the monetary transmission mechanism. Yields on government bonds and indicators derived from these yields are an important source of information for the monetary policy decision making process. Finally, in implementing government policy, government bonds serve as collateral. Sound government finances are a prerequisite for the long-term success of monetary policy and for maintaining price stability. However, healthy government finances do not necessarily imply zero government debt. For the functioning of financial markets and an efficient monetary policy, a liquid market for government bonds is a considerable advantage. BIS Review 94/2007  1
This means that aspects such as the privacy or protection of information, transparency towards consumers (so they may take informed decisions) and the effective level of competition between providers of specific technological services (take, for example, the use of the cloud) all gain in importance. However, these matters lie outside the typical remit of financial supervisors and thus make it necessary to promote a collaborative climate and more intense cross-disciplinary dialogue. Conclusions By way of conclusion, I would assert that twenty years after the creation of the euro, major headway has been made in equipping EMU with greater stability. However, the architecture of EMU remains incomplete: there is a pressing need to complete Banking Union and make headway on the Capital Markets Union. To do this, we must push through key aspects such as the common European deposit insurance scheme, and deepen financial integration. The internationalisation of the banking business would help bring about greater diversification, weakening thereby the link between sovereign and banking risk. Further, harnessing synergies and economies of scale may contribute to improving profitability. That would provide for the investment needed to enable the ongoing adaptation to the change wrought by the digitalisation of the banking business. Digitalisation promises major benefits, both for consumers (in the form of better and tailored services) and for those financial institutions able to seize this opportunity. Our role as supervisors lies in ensuring a safe and stable transition for the good of all citizens. Thank you. 8/9  9/9

The period of low US policy rates during 2004–5 was in part the result of the FOMC’s desire to make good on its earlier promise during the 2001–3 downturn to maintain low interest rates for a considerable period in order to head off deflation worries. While I do not believe that the evidence supports the view that this was the sole cause of the pre-crisis build-up in financial imbalances in the United States, it is plausible that they made some contribution.11 Maintaining very low interest rates long after the economy has recovered must run the risk of encouraging a new credit/asset-price boom and the reappearance of financial imbalances. While macro-prudential policies, such as the application of the counter-cyclical capital buffer in Basel III, are intended to be the primary instrument to head off such excesses, it seems unwise to place too great a burden on them. For that reason, I believe one should be cautious about committing to monetary policies that remain loose for a very long period after the economy has normalised. Let me conclude with a few more general remarks about the role of monetary policy at the current juncture. The sluggishness of the recovery has led some to question whether the framework is flexible enough to allow for sufficiently expansionary policies to support the recovery. Conversely, others suggest that the persistent overshoot of the inflation target indicates that if anything the MPC has interpreted its mandate too flexibly.
Globally, we have seen a silver lining in the response to the pandemic. In Malaysia, the nation has rallied closer together to become more socially conscious not just in aspects of public health and welfare, but also in supporting the local economy. The Islamic financial institutions in Malaysia, in particular, have risen to the call to generate more positive impact through the “Value-based Intermediation” (VBI) agenda. Participating Islamic financial institutions have endeavoured to refine their products and services offerings in response to the need of their customers. Eight Islamic banking institutions (half the total number of Islamic banks in Malaysia) are offering microfinancing facility, utilising the Micro Enterprise Facility established by the Bank to increase access to finance for microenterprises with viable business. In terms of financial protection, more than 50,000 participants have benefitted from various microtakaful products that provide affordable or free protection for the hard core poor and individuals with special needs. Islamic financial institutions also continue to steward efforts towards building a greener financial system. In August 2020, the VBI Community of Practitioners in collaboration with the Bank issued three Sectoral Guides on energy efficiency, renewable energy and palm oil for public consultation. The documents are intended to provide detailed guidance to the industry in embedding environmental, social and governance (ESG) risk considerations in their financing and investment decision making process. Aligning corporate values with the objectives of promoting shared prosperity and sustainable growth is a critical first step to elevate the role of finance towards achieving inclusive growth.

6  BIS central bankers’ speeches  Chart 4: Whole economy productivity(a) Indices: 2008 Q1 = 100 120 Pre-crisis trend  110 100 90 80 70 60  2000  2002  2004  2006  2008  2010  2012  (a) Pre-crisis trend is projected using quarterly growth rates between 1999 and 2007. Chart 5: UK current account  (a) Includes compensation of employees. BIS central bankers’ speeches  7  Chart 6: Sterling ERI Index: January 2005=100 115 110 105 100 95 90 85 80 75 70 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014  Chart 7: Survey indicators of capacity utilisation(a)  Sources: Bank of England, BCC, CBI, CBI/PwC, ONS and Bank calculations. (a) Measures are produced by weighting together surveys from the Bank’s Agents (manufacturing and services), the BCC (non-services and services) and the CBI (manufacturing, financial services, business/consumer services and distributive trades) using nominal shares in value added. The surveys are adjusted to have a mean of zero and a variance of one over 1999 Q1 to 2007 Q3. The BCC data are non seasonally adjusted. 8  BIS central bankers’ speeches  Chart 8: CPI inflation projection  Chart 9: GDP growth projection  BIS central bankers’ speeches  9
The harmonisation of these criteria would be highly desirable, especially in relation to the classification of exposures (an area in which the European Banking Authority has made notable progress in recent months) and, in particular, provisioning policy. It should be noted that, although the supervisor may adjust the capital requirements, imposing higher levels of capital does not sufficiently make up for the lack of adequate provisions. That is because the level of provisions always has direct and transparent implications for the profit or loss of the bank, while an increase in the minimum capital requirements via Pillar 2 is not usually transparent (as the Pillar 2 requirements are not public) and, in most cases, does not have any practical effect, insofar as the bank has a capital buffer that enables it to cover the new requirements. Accordingly, the supervisor should be concerned to promote the application of rigorous and uniform provisioning criteria involving the appropriate recognition on the balance sheet of the value of each exposure. Clearly, the formal publication of binding accounting criteria by the SSM may be contested, insofar as accounting does not form part of its competencies according to the EU regulation under which it was set up. At the same time, subjecting all banks active in the markets to IFRSs for consolidated accounts, certainly reduces its ability to exert an influence in this area. In short, the Spanish experience shows both the usefulness and feasibility of an involvement of the supervisor that is compatible with the law in force.

The difficulty is increased by the “neutral” real interest rate changing, for instance when the productivity growth in the economy changes. On the basis of experience, simple rules of thumb and rough calculations, everyone can per se obtain an idea of how monetary policy operates. However, this is another area that needs to be developed. Altogether, this review shows that monetary policy decisions can never be made mechanically with the aid of simple rules of thumb. In order to firm up the analysis and make it easier to describe the basis for our decisions, it is notwithstanding this important to describe and keep to a conceptual framework, around which we construct our analysis. As we gain increased knowledge, our analysis and conceptual framework are complemented or modified. In order not to lose clarity, we endeavour in our inflation reports, speeches and publications to describe our analytical apparatus and its development. Challenges in the present situation The growth prospects for the Swedish economy have improved considerably in recent years. The Riksbank has been successful in creating support for and making the inflation target credible, central government finances have improved and many structural reforms have been carried out, although much remains to be done. However, although for the most part, it looks good, there is a risk that the Swedish economy is now growing too rapidly due to over-optimistic assessments of growth prospects. This must in my view be taken into consideration in the conduct of monetary policy.