samchain/econo-pairs-v1 huggingface dataset:
In recent months, inflation has brought important surprises, which have been driven by the impact of high global cost pressures resulting from higher commodity, energy and food prices, triggered largely by the Russian invasion of Ukraine. This has occurred in a context in which difficulties in global supply chains are still present, and even worsened as a result of the confinements in China, the peso remains depreciated and the activity gap remains positive. The short-term inflation outlook is risen sharply in response to this combination of factors. In the scenario I will present in a few moments, the maximum level to which we project inflation could reach is close to 13% annually in the third quarter of this year. As for activity, in line with expectations, it started to adjust in the first quarter of this year. However, the composition of demand shows that private consumption remains high, while investment is weakening. In the medium term, the adjustment of macroeconomic imbalances remains the central element for inflation to converge to 3% within the two-year horizon. The high level of inflation and the higher persistence associated with its main fundamentals have required a more contractionary monetary policy to achieve such convergence. This has driven us to raise the MPR to 9% and we estimate that new adjustments of a smaller magnitude will be needed to ensure inflation convergence to 3% in two years' time. Risks remain high, particularly because of the level and persistence of inflation I just mentioned.

•  The fact that monetary policy has an impact on financial stability does not necessarily mean that it should directly seek to achieve it. Monetary policy and financial stability: uncomfortable bedfellows? Let me offer two reasons why operationalising a financial stability role for monetary policy may be difficult. Leaning against winds from opposite directions? First, conflicts could arise between the price stability and financial stability objectives. •  Financial cycles are typically longer than business cycles, and the two cycles may diverge. •  The interest rate appropriate for price stability may not be consistent with financial stability. •  How does one lean at the same time against two winds blowing from opposite directions? One reason why the winds might blow from opposite directions, especially for emerging economies, is the role played by international liquidity and capital flows. •  Philip Lane has detailed the strong inter-linkages between global liquidity conditions, international debt flows, and domestic credit conditions. •  Maurice Obstfeld argues that because of the impact of financial globalisation, monetary policy carries a big burden trying to achieve both financial stability and macroeconomic stability. The experience of Emerging Asia during 2010–2013 is illustrative. •  Asian economies were broadly in full employment with low inflation and some downside risks to growth from the Eurozone crisis. 4  Borio, C and Zhu, H (2008), “Capital regulation, risk-taking and monetary policy: a missing link in the transmission mechanism?” BIS Working Papers, No. 268, Bank for International Settlements, December.
For example, there may arise situations in which the taxpayers in one country may be faced with the prospect of essentially bailing out the depositors of a branch in another country through their national deposit guarantee scheme. Incidentally, there is a recent example from my own country (although, technically, it concerns a bail-out under the investor compensation scheme rather than the deposit guarantee scheme). After a long and complicated investigation the Swedish Deposit Guarantee Board decided around two weeks ago to commence payments to a group of mostly Italian investors that were the unfortunate clients of the hair-raisingly ill-managed securities company CTA, which went bankrupt in 2004. Fortunately, CTA was not one of the bigger players – in fact I had never heard of it before it became an item for the Deposit Guarantee Board – and the fund will be able to cover the payments to the approximately 1 200 clients, amounting to around € million in total. However, if a larger institution had gone bust, the fund alone would not necessarily have been able bail out the investors. All deposit guarantee schemes – as well as investor compensation schemes – are typically underfunded and are not able to cope with failures in large cross-border financial institutions. In such events, additional government funding will be needed.

As past experience shows, it is difficult to push inflation back up to the central bank’s objective if inflation expectations fall meaningfully below that objective. Japan’s experience is cautionary in this regard. Recent evidence on inflation expectations suggests some firming, but there is still cause for concern. Although both measures of longer-term inflation compensation based on nominal and inflation-indexed Treasury securities as well as some survey measures of inflation expectations have risen modestly since mid-February, the levels of many of these measures remain quite low. 2  BIS central bankers’ speeches  Now, as I have noted, the low level of market-based inflation compensation probably reflects factors besides inflation expectations, in particular lower term premiums. Still, it would be prudent to consider the possibility that longer-term inflation expectations of market participants may have declined somewhat. Even after a rise in its most recent reading, the median of the three-year inflation expectations from the New York Fed’s Survey of Consumer Expectations remains near its lowest reading over its short history. Renewed declines in survey measures would be worrisome. However, at this point, my conclusion is that inflation expectations have not become unanchored. In sum, I anticipate that the combination of decreasing resource slack and anchored longerterm inflation expectations will help push inflation up to our 2 percent objective over the medium term.
Clearly, those retail banks with little or no tradition in issuing capital and other securities in capital markets will have particular difficulties coping with the enhanced regulatory framework. Admittedly, though, the corporate structure of many retail banks -particularly those which are not yet regular corporations listed in capital markets - may face less immediate pressure to restore higher profitability levels. That may allow them to buy some time. 3/5  Yet, low sustained profitability is often a symptom of vulnerability and, certainly, of inefficient allocation of the resources employed in the banking business. There is therefore a need to reflect on the best way to strengthen retail banks, to make them better able to cope with the new macroeconomic and regulatory conditions without damaging the social benefits associated with their activity. It would be unsound to try to establish specific strategies with the pretention to be unconditionally applied in all circumstances. However, I see some difficulties for numerous retail banks in adapting to the low-profitability and tighter regulatory environment if they are not able to increase their ability to compete with banking corporations in terms of costefficiency, business diversification and access to capital markets. Some transformation of the retail and, in particular, the saving banking sector therefore seems unavoidable in order to meet the target. We, in Spain, have already taken some steps in that direction.

This document should enable a complete analysis of budgetary projections to be performed and is, in fact, that used by the European Commission as a basis for its assessment of Spanish fiscal policy. 7/9  The importance of budgetary consolidation Before concluding my address, I should like to offer some reflections on the importance of completing the budgetary consolidation process. Spain’s public debt-to-GDP ratio remains very high. Despite its recent stabilisation, it is close to 100% and more than 60 percentage points above its pre-crisis level. Moreover, the budget deficit (both the total deficit and the structural deficit) is also very high and exceeds that of most of our European partners. The outstanding adjustment is still significant, despite the current context of a high pace of growth and low interest rates, that is relatively conducive to reducing the structural budget deficit and the public debt-to-GDP ratio. Reducing fiscal imbalances is important in order to moderate the future financial costs associated with public debt, and also to reduce the vulnerability of the economy to a possible tightening of financial conditions, without forgetting the need to restore scope for a fiscal policy response in the event of possible adverse growth scenarios. For all these reasons, it is crucial to adopt a time perspective that goes beyond the annual budgetary exercise, with a detailed and credible deficit correction plan geared towards gradually reducing public debt.
We need to establish whether or not there are actions that central banks can and should take to minimise the likelihood of macroeconomic instability arising from extreme fluctuations in asset prices. Second, how should monetary policy react to structural changes in the economy? 3  BIS Review 65/2000  Monetary policy and asset prices Let me start with the question of monetary policy’s response to movements in asset prices. This depends in turn on how the central bank chooses to use the information contained in asset prices. In a regime that explicitly targets inflation, asset prices are taken into account via the effects on aggregate demand. Rising share prices increase household wealth and that would raise consumption for a given level of income if these increments to wealth are considered to be of a permanent nature. At the same time, consumer confidence boosted by higher share prices could potentially make individuals more prone to spend their increased wealth. An increase in share prices also makes investment more attractive to firms since it increases collateral values and lowers the cost of new capital relative to existing capital. If share prices predict higher expected output growth, this could also lead to more investment. If the asset prices on which households and firms base their consumption and investment decisions prove to be too optimistic, this would create inflationary pressure in the short term. An important question in this context is how sensitive households’ and firms’ consumption and investment responses are to changes in asset prices.

Since 1995 Swedish house prices have risen by more than 150 per cent; the corresponding figure in the United States is around 115 per cent. At the same as house prices have soared, inflation in Sweden has been moderate and consumer prices have only risen by 14 per cent since 1995 (see figure 2). There are several factors behind the upturn in Swedish house prices; Swedish households’ real incomes have grown, their financial wealth has increased and in addition real interest rates have been low. Although more housing has been built, it has not been enough to meet the demand. The percentage of Swedish municipalities reporting a shortage of housing doubled to 42 per cent between 2002 and 2007 according to statistics from the National Board of Housing, Building and Planning. More than half, or 60 per cent, of the population now live in municipalities with housing shortages. Households’ debt ratio, that is their debts in relation to their disposable income, has risen rapidly in recent years and is now around 150 per cent. It is difficult to compare the current debt ratio with earlier periods, as these have been marked by the conditions prevailing at the time. For example, the debt ratio that preceded the credit boom at the end of the 1980s was marked by the regulated credit market and did not reflect either households' willingness or ability to bear debt. The period after this was affected by the economic crisis and institutional changes with an ensuing rapid credit crunch.
The Riksbank also has an internal preparation process with broad participation. Finally, we publish the minutes of Executive Board meetings in which the opinion of each member is evident. The latter issue has a different “charge” at European level since there is a risk that a genuinely single monetary policy would be undermined if individual positions were made public. Monetary union and financial stability in Sweden The Riksbank not only has the task of maintaining price stability but also that of promoting a safe and efficient payment system. In light of this, allow me also to say something about the potential implications of entry into monetary union from this perspective. The financial markets in Europe have developed rapidly over the past decade, partly as a result of the fact that the freedom to trade financial services is fundamental to the cooperation in the EU. Competition for the national banks has hardened. The single currency has contributed to the evolution of a far better capital market outside the banks, which has increased competition further. In several large European countries, a process of structural transformation in the banking systems is underway, much like that experienced in Sweden in connection with the banking crisis at the beginning of the 1990s. When competition grows stiffer, it can of course pose a threat to stability, especially if the banks are not accustomed to competition and are also weakly capitalised.

ERM2 provides considerable scope for targeting monetary policy at price stability. This applies of course for the normal band widths of ±15 per cent, but would also apply for the narrower bands of ±2.25 per cent, which the European Commission has used in its evaluations. Just like today, there is therefore reason to continue publishing inflation reports and to hold regular monetary policy meetings. Swedish experiences from recent decades of fixed exchange-rate regimes have, as we all know, not been entirely positive. The events of 1992 are still fresh in our memories. But a lot has happened over the past ten years. Our economic policy has become credible and successful. In recent years, it has followed the same principles as those in the euro area and has been characterised by efforts to achieve price stability and sound public finances. Participation in ERM2 would not change the stance or objective of policy of course. Tensions stemming from a lack of competitiveness in the Swedish economy are also unlikely; the rate is set partly to ensure a reasonable level of competitiveness, while inflation over the coming years can be expected to be more or less in line with that of the euro area. Moreover, the process for other countries’ entry into monetary union was smooth in spite of the fact that the circumstances in many cases were less favourable at the time than in Sweden today. For instance, the uncertainty surrounding the implementation of the third stage and the introduction of the euro is now gone.
Chris Salmon: The UK payments landscape Remarks by Mr Chris Salmon, Executive Director for Banking Services and Chief Cashier of the Bank of England, at the C D Howe Institute Special Policy Conference “Canadian Payment Systems”, Toronto, 4 November 2013. *  *  *  I would like to thank Nicholas Constantine, Andrew Dent, Rosey Jeffery, Simon Rickenbach and Peter Williams for their comments and contributions. Introduction Today’s conference provides an opportunity to review how the Canadian payments landscape could evolve. On the basis that there will be some relevant crossovers, perhaps the most helpful contribution I can make is to summarise some of the challenges we face in the United Kingdom. In line with this session’s focus, I will cover the core sterling payments infrastructure, defined as the key wholesale and retail payment schemes that the Bank oversees, and focus on integrity, which is at the heart of a central bank’s interest in payments. As a precursor it may be helpful to give a brief overview of the current set-up of the UK’s payments landscape. The Bank of England operates the UK’s real time gross settlement infrastructure, RTGS. CHAPS, our high value payment system, has settled on a real time gross basis since 1996, and CREST, our securities settlement system, since 2001. They settle in central bank money across accounts their members hold in RTGS.

While high value payment systems (HVPS) in many countries are owned and operated by the central bank, CHAPS is run by “CHAPS Co,” a non-profit-making, private company owned by its members. Its role includes setting system rules, monitoring compliance and administrating membership. The Bank of England was given statutory oversight responsibilities in the Banking Act of 2009 and CHAPS Co are formally overseen on this basis. To reiterate, in the UK, although the Bank of England owns and runs the RTGS infrastructure, CHAPS Co is responsible for the provision of CHAPS. There is a parallel with Canada here, where the HVPS (“LVTS”) is managed by the Canadian Payments Association (CPA) instead of the Bank of Canada. This parallel is limited though as the CPA both manages and also runs the infrastructure behind LVTS. There are also a number of privately-operated retail payment systems in the UK which settle across RTGS accounts on a deferred net basis. These include Bacs, which handles direct debits and credits over a three day clearing cycle; Faster Payments (FPS), a near real-time retail payment service which operates “24/7”; and systems for clearing cheques, interbank ATM obligations (LINK), and card payments (Visa Europe currently settles over RTGS though Mastercard does not) – all are industry owned. Except for Visa Europe, each of the systems that settle with the Bank has a contractually separate, industry-run payment scheme, which manages its rules, while their operational infrastructure is ‘outsourced’ to a supplier company.
BIS Review 72/2001  3  Looking ahead Before I take a look at future tendencies, it may be in place to emphasise that the Swedish economy is fundamentally sound, with a good potential for growth and employment, accompanied by surpluses on the current account as well as the public finances. The recent temporary increase in inflation at a time of slowing activity is a problem that Sweden has in common with other countries around the world. Global economic growth has slowed, as I mentioned, during the spring. The fall-off has been deeper and more protracted than many observers counted on at the beginning of the year. Information received during the summer confirms the impression of a somewhat more drawn-out course, with an upturn that looks like being delayed, in many respects because the key player in the global economy - the United States - is still limping. The imminent recovery presaged by signals early this summer, above all from the financial markets, now seems somewhat more doubtful. The outlook for the Japanese economy is still highly uncertain. And in Europe the growth forecasts for the leading economies have had to be revised downwards. It is perhaps not surprising that after a series of years of strong growth it is taking time to overcome the tensions that arose in the wake of the economic euphoria in the United States. Neither is it odd that with an increasingly integrated global economy, the American slowdown is affecting many other countries, too.

It is pleasing to note that the leasing sector has a bright future in Zambia as evidenced by its growth. Since the liberalisation of Zambia’s financial sector, the contribution to private sector credit of leasing companies has increased. In the period December 2001 to December 2006, total leases increased from K67,161 million to K206,972 million, representing an average annual growth rate of about 25.2 %. At the same time, the performance of the leasing sector was satisfactory as on average, leasing companies maintained adequate capital and reserves relative to their risk profiles and the sector has been consistently profitable. Notwithstanding this improved performance of the leasing sector, I am aware of a number of constraints the financial sector in general is facing, including the low financial intermediation, limited access to financial services for the rural population and low-to-middle income earners, high cost of funds, lack of product diversity and underdeveloped money and capital markets. To redress these impediments to economic growth and as an integral part of the pro-poor growth strategy, the Government’s objective is to enhance financial intermediation and improve access to financial services both in urban and rural areas. To this end, a five year Financial Sector Development Plan (FSDP) was prepared in 2004. This Plan aims at promoting the development of a financial system that is stable, sound and market-based to support efficient resource mobilization, which is necessary for economic diversification, sustainable growth and poverty reduction. Currently, the key recommendations of the FSDP are under implementation.
The predicted values are from a regression of daily changes in UK 3-year nominal spot interest rates on near-term surprises in economic data, from the UK and a range of other countries. 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  That uncertainty about wage formation may have been one thing that tempered the market’s reaction to stronger-than-expected economic data. But I suspect there was something else at work as well – and that’s Brexit. There’s been a persistent strain of opinion that EU withdrawal is something that necessarily means lower interest rates, or at least that it’s a reason to avoid putting them up. If so, then I think the belief has been overdone. It’s not that the opposite is true. I’m certainly not going to argue here that interest rates will inevitably rise as Brexit proceeds. Apart from anything else, it isn’t the only show in town. Economic shocks come along all the time, in both directions. For example, one of the things that has sustained the UK economy over the past year or so, and to that extent contributed to the recent decision on interest rates, is the strength of the global recovery. On a UK-weighted basis, the world economy looks to have grown by almost 3% in the year to Q3, faster than for many years. This has nothing to do with Brexit and, if global growth were to falter, that too would have implications for the UK.

The estimated regression line has clearly shifted to a lower position since the crisis and the period of weaker productivity growth that has ensued. However, if people come to accept the implications of that weaker productivity trend for the real wage increases they can expect to receive – the “norm” for real pay growth being one thing that determines the position of the Phillips curve – that’s precisely what you’d expect to see. It would also shift leftwards if structural improvements in the labour market had lowered the equilibrium rate of unemployment. The MPC reduced its estimate of that equilibrium rate, from 5% to 4½%, in February. In real time, as it’s happening, it’s statistically  Chart 10: Phillips curve: down but not out  difficult to distinguish a shift from a flattening and there is clearly room for caution about our forecasts for growth of wages and unit costs. But, over time, I think the evidence looks more in favour of the former. The curve still seems to have a slope – all else equal, a tighter labour market is likely to mean faster wage growth. Conclusion  Sources: ONS, Bank of England, and Bank calculations. I was in Aberdeen earlier this year and, when asked by a wily reporter what I planned to vote at 11  the following MPC meeting, fobbed off the question by referring to a number of “imponderables” . I’ve talked about some of those today.