samchain/econo-pairs-v1 huggingface dataset:
We at the Fed need to very closely monitor the data to make sure that inflation remains contained. And we will. But as I believe I will demonstrate this morning, the most likely result is that these supply shocks cause slower growth in the near term while having only a modest effect on longer-term inflation rates – which has been the U.S. experience since 1986. Unemployment remains quite elevated, at 8.8 percent, and I anticipate a slower return to full employment than we would have experienced absent these supply shocks. With the core inflation rate over the prior year at a little above 1 percent, I anticipate only a gradual return of core and total inflation rates to something like our consensus “stable” rate of about 2 percent, over the medium term. If the economic data continue to support this outlook then the current, accommodative stance of monetary policy is appropriate, and can remain in place and continue to support economic growth – so that we continue to make progress toward our goals of returning to full employment and a sustainable long-run inflation rate – the two elements of the Federal Reserve’s dual mandate from Congress. 1  My colleague Geoffrey Tootell, Director of Research at the Boston Fed, has prepared an illuminating public policy brief that investigates whether commodity price spikes cause long-term inflation.

Eric S Rosengren: A look inside a key economic debate – how should monetary policy respond to price increases driven by supply shocks? Remarks by Mr Eric S Rosengren, President and Chief Executive Officer of the Federal Reserve Bank of Boston, to the Massachusetts Chapter of NAIOP, the Commercial Real Estate Development Association, Boston, 4 May 2011. *  *  *  Of course, the views I express today are my own, not necessarily those of my colleagues on the Board of Governors or the Federal Open Market Committee (the FOMC). I would like to thank David Begelfer and his colleagues at NAIOP Massachusetts for inviting me to join you today to discuss the economy and monetary policy. I am happy that financial markets and the economy have made significant progress since the depths of the financial crisis, but I am far less happy that the recovery to date has been so undesirably slow and anemic. In my reading of economic history this is, unfortunately, typical of economic downturns that are accompanied by severe financial disruptions. The debate I’d like to focus on today is the one over the likely impact of recent increases in the prices of food and energy, and how monetary policy should respond. The Fed’s policy stance, as you know, is currently very accommodative – a stance that I believe is appropriate given the tentative recovery and still-high unemployment.
In view of the incompatibility of monetary policy autonomy, full capital account liberalisation and a fixed exchange rate, EMU participants have given up independent national monetary polices in favour of the  BIS Review 70/2002  1  free movement of capital and the adoption of a single currency. The main driving force behind this decision was the desire to overcome the obstacles to the completion of the Single Market and to progress towards monetary and, eventually, economic union. A single currency was a logical step in this regard. Given the constraints which the adoption of the single currency entails, the emphasis which the Treaty puts on containing fiscal deficits and on labour mobility is understandable. In this set-up, in fact, the adjustment to asymmetric shocks has to take place through fiscal policy and the labour market. Since labour mobility within the Union is still weak, however, in practice this means that the onus of adjustment falls on fiscal policy. Fiscal consolidation thus remains a necessary precondition for the success of EMU. Indeed, whereas it could be argued that the Stability and Growth Pact precludes fiscal policy from responding to short-term domestic needs, it is equally true that the constraints arising from that Pact are meant to ensure that governments in the euro area have the necessary room for manoeuvre over the medium-term. The presumption here is that by achieving close to balance or surplus positions, governments would be in a better position to deal with normal cyclical fluctuations.

It explains endeavours to encourage or enforce compliance with them, through a variety of measures including international bodies, such as the Basle Committee, IOSCO, the Committee on Payment and Settlement Systems, the IMF, and the World Bank - and others too numerous to mention. The Financial Stability Forum is noteworthy too, as it brings together the three sets of key bodies involved in financial stability oversight - central banks, regulators and finance ministries - to supplement the actions of other international organisations in promoting standards globally. 13. Public policy response - if things go wrong  I spoke about identifying threats and the steps to mitigate them, but we also need to be able to intervene if things do go wrong. In a non-zero risk environment, failure is a possibility. So we need to look at both mitigants in relation to the impacts of financial crisis, and how to restore confidence. This is true both for financial crises which could occur as a result of business failure, as well as possible major operational disruption - whether from terrorism, cyber failure, or natural calamity. They are situations where predictability is so vital, when normal mechanisms for decision making may be in abeyance. I have left until last the tricky question of emergency liquidity injection and lender of the last resort. This is an area full of mystique and ambiguity.
Expectations may be more solidly anchored, which would lessen the impact of the output gap on current inflation. It is also possible that, as a result of structural reforms, the NAIRU has decreased in many countries in recent years, thus giving the "optical" impression of a horizontal Phillips curve during this period. In a broader sense, globalisation itself may also be responsible for the flattening of the Phillips curve. In an open economy, domestic demand changes can easily be satisfied through increased imports. As a consequence, domestic inflation may become less sensitive to the domestic output gap and more sensitive to global tensions on production capacities. Overall, these developments have made it easier for central banks to bring down inflation without real costs to the economy. But it is clear, today, that these effects are being reversed. The prices of oil, food and other commodities are now increasing fast. There might be three reasons for this rise (the importance of which is currently hotly debated): first a supplydemand imbalance; second, the emergence of commodities as an asset class, attracting substantial flows into commodity funds; and, finally, the use of commodities as a hedge against inflation or dollar depreciation. In addition, while labour supply in emerging countries will remain abundant, it is not all that clear that it will remain cheap. Indeed, we are currently seeing an increase in export prices in emerging countries, which translates into higher import prices for developed economies. In short, the world environment has become very inflationary.

A recent BIS survey4 of central banks found that 86% were actively researching the potential for CBDCs, 60% were experimenting with the technology and 14% were already deploying pilot projects. The central bank digital money, intended to be digital equivalent to cash, could further increase consumer choice, competition and accessibility with regard to digital payments, thus supporting financial inclusion and making cross-border payments faster and cheaper. In addition, some central banks see the preservation of monetary sovereignty in case of widespread use of crypto assets (issued by private entities) as a motivation factor. However, central banks are also exploring possible side effects of digital currency. For example, the risk of financial disintermediation as households and businesses can chose between holding accounts with commercial banks or central bank, or the increased run risk in case of distress, as there will be readily available safe assets, hence endangering the financial and monetary stability. Therefore, it is crucial that digital currency meets public demand, contains possible risks and ensures that payments landscape remains competitive. How do we as a central bank embrace evolving challenges in the payments area? Two years ago, we established an Innovation Hub aiming to facilitate, encourage and support financial innovation. We find this communication channel very useful for both the fintech and the National Bank. We help new players to better understand the existing regulation, and in turn, they help us discover potential regulatory gaps.
And if Piketty is right, inequality trends are self-perpetuating as wealth begets wealth. Economic and financial stability That naturally begs the question of whether anything should be done. On the face of it, this is not the business of a central banker. There is considerable truth in that. The tools at the disposal of a central bank – interest rates, the money supply, regulation – have an impact on inequality which is, at best, indirect, inadvertent and transient. Central banks can do nothing, durably, to reshape long-term structural trends in the economy, much less in broader society. Yet inequality has appeared on central banks’ radar during the course of the crisis, sometimes flashing red. That is because, at least over the shorter-term, central bank policies can and probably have reshaped patterns of inequality. Some have gone further, arguing that central bank policies of extra-ordinary monetary accommodation have, by boosting asset prices and wealth, exacerbated inequalities (Saiki and Frost (2014)). In effect, central banks stand accused of having provided an extra spin to the Piketty cycle. It is worth viewing this claim in context. In response to the Great Recession, monetary policy globally went into overdrive. Interest rates fell to the floor and central bank money supply rose to the ceiling – so-called quantitative easing or QE. Interest rates have never been so low, nor central bank money supply so high (relative to money spending), in the Bank of England’s 320-year history. Extraordinary times heralded truly extraordinary measures.

Overall, monetary and financial developments point to low inflationary pressures and liquidity risk. Monetary indicators continued to slow down in December, as well. Annual money supply growth fell to 5.0%. Developments in the external sector were the main drivers of  BIS central bankers’ speeches  1  money growth, whereas domestic demand for money was low. The relatively low demand of the government for borrowing and higher demand of households to invest in public debt securities reflected in reduced funding of the budget deficit by the banking system. Similarly, credit to the economy recorded low annual growth rates both for businesses and households. The domestic currency prevailed over foreign currencies in the credit market, hence enabling better transmission of the monetary policy signals to the economy. Recent information reconfirms our projections for future economic developments. In the period ahead, economic growth will be driven by economic developments in the global setting and in our trading partners, the fiscal policy nature and enhanced productivity. In 2013, economic activity is expected to remain weak and will continue to be driven by net exports growth, although at lower rates from 2012. The forecast is based on a non-encouraging economic outlook for our trading partners. It also reflects the low diversification of Albanian exports. Domestic demand is expected to remain at low levels, reflecting the sluggish private consumption and investments and the positive contribution of the public sector.
People worry about price moves; a rise will boost emotions although today’s puzzle lies with prices’ stubbornness to stay too low for so long. But money loss gives them more shivers, pushing most into dire straits when that risk materialises. In an emotional and fretful  environment, any message about the safety of our pockets – the essence of financial stability – may be easily distorted, thereby fanning fears. Sometimes, central bankers’ talk seems too strong, on other occasions too vague for both markets and the public at large. Confronting volatility, uncertainties, mistrust or even panic and scepticism only via the monetary toolkit is not enough. Central bankers are struggling to address some of these issues, to make them understood by using all the modern and persuasive communication methods or tools. Nevertheless, their effort is poorly matched by the fiscal policy and by the often delayed structural reforms. In our case, as the global financial crisis unfolded, it took a while until the loss of confidence in the main actors of the financial industry filtered in to also affect the National Bank of Romania. Thus, a few years ago, the public perceptions started to be influenced by local fake-news  campaigns echoing the ‘post-truth era’ that pointed to the NBR as being ‘the banks’ lawyer’.

Clear communication of the central bank’s objectives, policy strategy and its decisions proved essential to anchoring inflation expectations and enhancing monetary policy effectiveness. However, most research works in this area show that increased transparency is not enough. A central bank must demonstrate commitment and ability to achieve its objectives through a systematic implementation of its policies. The markets and the public at large need to be convinced by central banks through consistent and effective words and policy actions, formulated as plainly as possible, in order to build knowledge and confidence – all vital for an effective management of public expectations. Despite a growing recognition of the importance of transparency in monetary policymaking, no consensus has emerged yet – either among academics or central banks. There is still debate on what is the appropriate degree of transparency or the best communication path, so that the two factors can contribute to an effective achievement of policy objectives as well as an efficient market functioning. The ‘best practice’ in the field depends, inter alia, on the size, structure and complexity of the economy, its global interlinkages and policy cycles, the monetary policy objectives and strategies, the political environment and institutional framework of a particular central bank, as well as on the extent and nature of uncertainty faced by policymakers. When assessing communication, one should take into account various economic, political and institutional factors in addition to the elements of uncertainty a central bank faces, no matter how modern the communication tools it employs.
Mugur Isărescu: Transformation of Central and Eastern European economies - lessons learned and the way forward Opening speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, at the Bucharest Security Conference, Bucharest, 4 October 2019. * * * Ladies and gentlemen, I am honoured to speak at this conference about a highly topical issue in front of such a distinguished audience. I believe it is a good opportunity to look back at the macroeconomic and financial developments in Central and Eastern European countries and, based on the past decades’ experience, to look forward into the future of these economies, also from the perspective of euro adoption. Generally speaking, the transition from a centrally-planned to a market economy proved to be a much more difficult task than it was first believed. The transition model was designed based on the concepts prevailing in the western countries in the early ’90s: free markets, globalisation and ensuring security and development via NATO and EU membership. With the benefit of hindsight, I can say now that not many knew exactly what the right thing to do was, relevant experience was lacking, and every model – be it shock therapy or gradual reform strategy – proved to have its limits, so it was rather learning by doing. It was a time of experiments and many reforms were carried out in a sui generis manner. I dare say this as a veteran, serving also one year as a Prime Minister in 2000.

The inherent flexibility of a managed float regime such as the one pursued by the NBR does, however, have its clear limitations, which should not be overlooked – this does not imply, by any means, that the central bank acts in a discretionary manner, taking the exchange rate wherever it wants. The abuse of flexibility can be as harmful to the proper functioning of the economy as the abuse of rigidity. In fact, the inflation-targeting regime implemented by the NBR is a mix of rules and discretion with the aim of formulating a coherent and effective monetary policy. As regards the current differences in the countries’ approaches to euro adoption, for some it might seem odd that Bulgaria, which lags behind in terms of real convergence, is considering joining the euro area sooner than Romania. It is only natural for our neighbour to contemplate euro adoption as the only sound exit from the present currency board. By contrast, in Romania, as well as in other countries pursuing a floating exchange rate regime, the approach is different, since euro adoption is more complex. This is by no means to say that Romania does not envisage joining the euro area, but merely that a comprehensive preparation is of the essence to cope with the related challenges. The Latin dictum festina lente is, in my opinion, quite suitable in the case of euro adoption as well. With respect to real convergence, many have been asking themselves “How fast is fast enough?”.
The weakness of the peripheral economies has propagated inwards, which along with the fragility of the fiscal accounts and the banking systems creates a vicious circle difficult to break. Emerging economies are decelerating across the board, most notably China. The Chinese authorities have shown greater tolerance for lower growth rates, in an effort to achieve a more balanced demand structure and address some imbalances in the financial system. Meanwhile, the change in world growth composition, along with expectations of an early withdrawal of the monetary stimulus in the U.S. has led to a realignment of investment portfolios. Thus, long-term interest rates rose across the board, stock markets fell and risk premiums increased. The effects were more pronounced in emerging economies, whose currencies, including the Chilean peso, have depreciated. This has been accompanied by a decline in the prices of commodities, including copper. For Chile, the terms of trade are less favorable than they were in March, and are expected to remain so over the projection horizon. Thus, a new scenario has been created where the very favorable conditions for emerging economies in terms of growth, commodity prices and financing conditions have started to normalize. Although some of the reasons behind these movements are positive, since they reflect better growth expectations particularly for the United States, they have triggered market volatility that may unsettle those economies with more vulnerable financial or fiscal positions. In the baseline scenario, Chile’s GDP will grow between 4 and 5 percent in 2013, less than expected in March.

The challenge will be to lead our economy on the path that will allow it to adjust at the lowest possible cost. The improvements we have made to our scheme of economic and financial policies in the past several decades are a precious asset for the task. Certainly our current position is very good compared with that of other emerging economies. Not every country took advantage of the great external conditions we faced in recent years  6  BIS central bankers’ speeches  and some may have allowed the creation of vulnerabilities, which will become more clearly evident when facing the changes that are approaching. We all wish dynamic, sustainable development for the Chilean economy, in order to enhance the country’s welfare. Our contribution as a Central Bank is to keep inflation low and stable. Also, to contribute, from our policy maker’s position, to identify and address the risks that may affect the normal functioning of the financial system. Thank you. Figure 1 GDP and final demand (annual change, percent) 15  15  10  10  5  5  0  0  -5  -5  -10  -10 04  05  06  GDP  07  08  09  10  GDP minus natural resources  11  12  13  Final demand  Source: Central Bank of Chile.
But that was one year ago. And one year can be a long time. Therefore, the need to focus on ensuring macroeconomic stability can never be taken for granted. This year Thailand faces challenges from both within and without. On the internal front, the main challenge is the flood – more specifically, how to ensure domestic recovery and restoration after the flood. The extent of the damage inflicted by the flood in the last quarter of 2011 was larger than expected and disrupted agricultural and manufacturing supply-chains in the flooded areas. As a result, the economy grew by 0.1 percent in 2011. The economy is projected to rebound in 2012, growing by 4.9 percent, boosted by private and public spending for post-flood restoration. In 2013, economic growth is projected to gather momentum, expanding by 5.6 percent. The Bank of Thailand is confident that the economy continues to be supported by strong fundamentals. Let me give you a few examples. Inflation expectations remain anchored. Healthy corporate balance sheet from past savings and profits will allow firms to rebuild and re-invest. Corporate lending remains high despite some headwinds to the banking sector. These headwinds include the effect of the flood and global uncertainty on the macroeconomic outlook and on loan quality, as we have seen some pressure on the delinquency rate. The new FIDF fee will also have some effect on banks’ bottom line.

Nevertheless, the Thai banking system will be able to handle these challenges given a strong capital base as a result of continued profitability in the past ten years, a good risk management system, and strong risk-based supervision. Therefore, Thailand’s key fundamentals remain resilient in the face of these challenges. Most importantly, human resources and know-how remain intact. History shows that no matter how severe the natural disaster, roads can always be rebuilt and buildings restored in a relatively brief span of time should the human spirit remain, as it does in Thailand. The growth rates I have mentioned for 2012 and 2013 are consistent with the medium-term trend, as strong fundamentals mean that Thailand’s long-term growth trajectory remains intact despite the flood and volatile external environment. An important reason for this is  BIS central bankers’ speeches  1  that Thailand is well positioned geographically to reap the benefits of growth in Asia. The rise of China and the ASEAN Economic Community (AEC) provide enormous growth opportunities from economic integration. For sure, there will be more competition. But our research shows that trade gains will be substantial, from both inside and outside the region. However, there is a catch. To reap these gains, the Thai economy will have to undergo structural adjustment, that is, the flow of labor and capital from sunset to sunrise sectors. The exact form of adjustment is uncertain, as it depends on global developments.