samchain/econo-pairs-v1 huggingface dataset:
To summarise: It clearly shows that the lower repo rate path provides both a higher forecast for inflation measured in terms of the CPIF that is closer to the inflation target (which is shown in panel d) and a higher forecast for resource utilisation measured in terms of the output gap (panel e) or the gap for hours worked (panel f), which even with the lower repo rate is low but not as low as in the main scenario. Thus, a repo rate path which is lower than that in the main scenario stabilises both inflation and resource utilisation better. Panels b and c also show that the mean squared gaps for inflation, output and hours worked are lower under the lower repo rate path. Is there any reason not to choose the lower repo rate path? One might think that if one nevertheless does not choose the lower repo rate path one must have strong reasons for this. So what does the Monetary Policy Report, which, of course, represents the view of the majority of the Executive Board, say about the various monetary policy alternatives? After Figures 2.13–2.15 are presented, there is a sentence on page 38 that states “Whether or not the repo rate levels set in these scenarios would lead to a better or worse development of the economy than that portrayed in the main scenario is not a simple question to answer” (my italics). Speaking for myself, I actually find it, on the contrary, a very simple question to answer.

Such an interest rate path would not entail any problems for financial stability or the functionality of the financial markets. Housing prices and mortgages do not comprise stability problems and should not affect monetary policy. Any future problems on the housing markets, or, indeed, any future problems with financial stability whatsoever, can best be managed through regulation and supervision. The repo rate is an altogether too blunt and unsuitable instrument to be used for any other purpose than stabilising inflation around the inflation target and resource utilisation around a normal level. Monetary policy should be directed towards stabilising both inflation and resource utilisation According to the Sveriges Riksbank Act, “the objective for monetary policy is to maintain price stability”. The objective is thus price stability. The Riksbank has specified this as an inflation target of 2 per cent. This means that monetary policy should stabilise inflation around the inflation target. Furthermore, in the preparatory work for the Sveriges Riksbank Act (Prop. 1997/98:40), it is stated that “as an authority under the Riksdag, the Riksbank, without prejudice to the price stability market, should furthermore support the goals of general economic policy with a view to maintaining a sustainable level of growth and high rate of employment”. How should this be interpreted? What is the best contribution monetary policy can make towards maintaining a sustainable level of growth and high rate of employment? It is to stabilise resource utilisation around a normal level.
Zeti Akhtar Aziz: Role of central banks in emerging economies Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Svein Gjedrem Colloquium, Oslo, 18 November 2010. *  *  *  Introduction Central banks continue to be challenged with changing demands as the environment before us is rapidly being transformed. These fundamental and pronounced changes have prompted calls for a review of the role of central banks in the financial system and in the economy. Frequently, such calls have been precipitated during a financial crisis, as was the case during the Asian financial crisis and more recently during this current global financial crisis. However, such institutional reforms undertaken in periods of exceptional conditions risks influencing the nature and direction of the reforms. While the reforms following a crisis may address the immediate term demands, of equal importance is the medium and the longer term implications of the reforms. Perhaps, an important lesson for central banks is that such reinvention and modernisation should be undertaken during the good times so that we will not be subjected to such changes during the worst of times. In essence, in such a dynamic environment, central banks need to continue to adjust and evolve to remain relevant and, thus, useful. It is my great honour to be invited to speak at the Norges Bank Colloquium held in honour of Governor Svein Gjedrem.

Putting the structural reforms that would remedy chronic problems in the labor market into practice immediately would prevent unemployment rates, which climbed during the crises, from becoming permanent and support potential economic growth. The lending appetite of banks significantly decreased due to the decline in risk appetite accompanied by the erosion of confidence and elevated uncertainties during the crisis. However, we can assert that there are favorable developments thanks to policy rate cuts made since November 2008 and the improvement in global risk perceptions. Especially the most recent developments suggest that there is an apparent improvement in Commercial Loans. The rise in loans extended to SMEs, which have an important share in the labor market, indicates that there is moderate recovery in economic activity. The NPL ratios, which saw all time highs during the crisis, started to decrease, albeit slowly and gradually. To sum up, the upward trend in bank loans, which started in the second quarter of 2009, continues on a stable course. As you all know, the impact of the global economic crisis on financial markets was terribly severe in the last quarter of 2008: countries’ risk premia saw record-high levels and excessive volatilities occurred in the currencies of many developing countries. Despite having been volatile at historically high levels and extremely sensitive to the global risk appetite, the Turkish lira displayed a relatively stable course, which lasted through the first quarter of 2010 following the peak of the crisis.
These global disinflationary forces are, in large part, the result of shocks to world prices. Oil prices have fallen by over 50% since the middle of last year. By itself, this would be expected to lower temporarily UK CPI inflation by around ¾ percentage points. Beyond oil, agricultural commodity prices have fallen by 25% in the past two years due to good harvests. Global non-fuel export prices, on a UK trade-weighted basis, have fallen 2%. These weak external price pressures go a long way towards explaining the fall in global CPI inflation over the past two years. They also account for around two-thirds of the fall in UK CPI inflation over the same period. If these are one-off shocks to the price level, their impact on annual inflation measures should drop out after a year. Such temporary deviations of inflation from target should be “looked through” in setting monetary policy.2 This is not, however, the whole inflation story. The weakness of global prices is not wholly the result of one-off shifts in global supply. For example, although supply news is likely to have been the biggest driver of the recent fall in oil prices, a weakening outlook for world demand is also likely to have played a material role. Moreover, perhaps between a quarter and a third of the fall in inflation, globally and in the UK, is not explained by weak external prices.

This explains the vigorous response of fiscal and monetary authorities around the world and in Chile, which has focused on protecting employment and access to credit for the most affected companies. At the local level, this projection is also contingent upon the larger investment projects resuming their normal operation and the institutional channeling of the social crisis reducing uncertainty and avoiding new episodes of violence. Furthermore, the scenario considers the additional impulse implicit in the Ministry of Finance’s announcements published in March. It is worth noting that the projections contained in the baseline scenario were made in an even more uncertain environment than in the December Report. It is worthwhile highlight the difficulties in estimating how the pandemic will evolve in Chile and the world, and how the control measures will be adjusted. The unprecedented nature of these elements means that the forecast ranges for growth contain less than the usual information input. All in all, the CBC Board estimates that this year Chile’s GDP will contract between 1.5% and 2.5%. In 2021, it will increase between 3.75% and 4.75%, and in 2022 it will grow between 3% and 4%. On the domestic demand side, higher cash needs to cover business operations will be reflected in a contraction of investment, with the baseline scenario estimating that gross fixed capital formation (GFCF) will contract by 8.2% in 2020. By sectors, both mining and non-mining investment are revised downwards, the latter more so.
Sarah Dahlgren: Five years since the crisis – where are we now? Remarks by Ms Sarah Dahlgren, Executive Vice President of the Financial Institution Supervision Group of the Federal Reserve Bank of New York, at the Institute of International Bankers’ Seminar on “Risk management and regulatory/examinations compliance issues”, New York City, 8 October 2013. *  *  *  Thank you Sally. It’s great to be here again this year to open up the IIB’s annual seminar on Risk Management and Regulatory/Examinations Compliance Issues. I appreciate the opportunity to address this group and to continue the dialogue that we’ve been having over the past several years. Given that we are celebrating the five-year mark of what was probably the worst part of the financial crisis, I thought I’d take this opportunity to take a step back and reflect a bit on how far we’ve come since the crisis in addressing some of the most pressing issues. Then I’d like to share with you some of my thoughts on areas that still need to be addressed and where I think more concerted effort is needed. As always, my remarks reflect my own views and not necessarily those of the Federal Reserve Bank of New York or the Federal Reserve System. It’s hard to believe that it has already been five years – and I’m not sure whether it feels longer or shorter than that!

We also need to make supervisory colleges more effective, including: •  Constructing the colleges with the appropriate members reflecting the key jurisdictions based on the scale or criticality of activities;  •  Ensuring robust dialogue between supervisors and firms in college settings;  •  Providing direct and candid feedback to firms and supervisors following from the interactions; and  •  Agreeing on key messages to firms or areas of supervisory focus to ensure consistency across home and host supervisors. I don’t mean to suggest that coordination isn’t underway already – because there is – but there are many reasons to be hopeful that even more progress will be made in the near-term. •  There are efforts such as those of the Financial Stability Board (FSB) and the Senior Supervisors Group (SSG) to promote enhanced information sharing and collaboration among supervisors. •  I’m particularly excited about the recent opening of the BIS’s Data Hub – a move designed to provide a more efficient and practical mechanism for supervisors – and eventually central banks and other relevant bodies – to share information on global banks’ activities and exposures. 3. AML/BSA compliance  A third area I wanted to touch on is one that I raised last year – AML/BSA compliance.
In this context, an expanded asset purchase programme was then launched. On March 9th, the Eurosystem began purchasing public sector securities in the secondary market along the curve from 2 to 30 years, being mindful of being market neutral. Purchases of securities at negative yield are permissible, as long as the yield is above the deposit facility rate. Marketable securities purchased under this program will be made available for securities lending. This programme is intended to stimulate the economy through different channels. The first one is the portfolio rebalancing channel, in which the fall in yields on safe government bonds induces investors to buy riskier assets, thereby stimulating the economy. Since the launch of the programme yields have dropped not only for the assets purchased but also for bank and corporate bonds and equity prices have continued to rise. A second channel works through lowering and flattening the yield curve. The purchase programme will continue until the end of September 2016 and beyond if we do not see a sustained adjustment in the path of inflation. This reinforces the guidance that interest rates will remain low for an extended period of time. A third channel is related to increasing credit supply. If the Euro-system buys assets from non-banks or institutions, then these funds will reappear as deposits in the banking system. 6  Andrade and Le Bihan, 2013, Inattentive professional forecasters, Journal of Monetary Economics, volume 60, p. 967–982.

We’re launching a payments challenge – limit payments to either cash or card for a week and tell us about your experience and the challenges faced. And school children will have the opportunity to win a guest blog slot on Bank Underground and enter the Bank Camera Action Competition. The Forum will run until 16 January 2019, culminating in a roundtable discussion between the Governors and members of the public drawn from the most engaged users of the platform. This will be live streamed to all. People can find out more, register their interest, and join the conversations on the Bank of England’s website.2  2  To register please visit www.bankfoenglandfutureforum.co.uk or email futureforum@bankofengland.co.uk. 5  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  5  To conclude, let me go back to the future, returning to the character field for the £ note. To sift through the public nominations and help decide the final character, the Banknote Advisory Panel will be joined by four new scientists, Dr Maggie Aderin-Pocock MBE, Dr Emily Grossman, Dr Simon Singh MBE, Professor Simon Schaffer. I’m pleased to welcome one of these scientists here today. Maggie Aderin Pocock, space scientist and familiar voice from the BBC’s Sky at Night, has been a long-term advocate of engaging the public in science, having presented to a quarter of a million people throughout her career (with science it’s all about numbers). Thank you Maggie for donating your time to this important task.
The salaries of these workers are especially sensitive to the cycle. Along with the high turnover rates, this facilitates cost adjustment in companies and cushions the impact of negative shocks on hiring. The results indicate that individual salaries are more flexible than what appears in aggregate statistics, emphasizing the importance of having real-time microdata to detect the evolution of inflationary pressures and thus help in monetary policy decision making. 3. Despite the adjustment capacity of the labor market, periods of weakness have significant associated costs. In particular, the process of reallocation to better quality jobs and more productive firms is diminished in the lower part of the cycle. For some workers, especially those in the early years of their working life, its effects can be very persistent. 17

However, there are factors restricting the leeway on this front, since the policy interest rates of some Latin American economies stand at record lows, and in some cases the central banks themselves regard them as close to the effective lower bound. Admittedly, the financial asset purchase programmes implemented by some Latin American central banks have been effective so far; but the consequences of their prolonged continuation or future extension are uncertain, given that the use of such instruments in the region is in its infancy. Therefore, in the event of further adverse shocks, there is a vital role to be played by the global and regional safety net, such as the support of the credit facilities provided by the IMF,11 the World Bank, the Inter-American Development Bank and the Development Bank of Latin America, among others, along with the Federal Reserve's swap lines and FIMA Repo Facility. Third, as in the rest of the world, the pandemic may have permanent downside effects on potential growth. These stem, among other factors, from extensive job destruction (the  10  According to the Economic Commission for Latin America and the Caribbean (“The social challenge in times of COVID-19”, COVID-19 Special Report, No 3), the poverty rate may rise, setting it back to 2010 levels, together with a significant increase in the Gini coefficient. 11 To date, the IMF has provided countries in the region with close to $ billion in financial programmes.
Some of these are one-off administrative measures rather than broader economic influences: they include the usually large price reductions imposed by utilities regulators to come into effect in the spring as well as the Chancellor’s decision to end automatic over-indexation of excise duties on fuel and tobacco. But there is also evidence, which is harder to evaluate, of more intensive retail price competition, squeezing retail margins across the board, and that also could hold down prices at least for a time. Indeed this last effect could intensify and extend further into the future as a result of the spread of e-commerce. Meanwhile we are faced with all the usual uncertainties about the prospective strength of domestic demand and about overall demand pressure - uncertainties which are currently increased by possible distortions of underlying trends associated with the millennium - the Y2K fog. Final domestic demand growth, including the growth of consumer spending, did apparently moderate in the middle of last year - as it needed, and certainly still needs to do. But there is plenty of evidence to suggest that underlying consumption growth will in fact remain quite buoyant: the strength of the equity market - or at least the “new economy” stocks; rising house prices - and not just in the South East; strong borrowing, including mortgage equity withdrawal, by the household sector; and rising incomes from employment.

And ten-year government bond yields have fallen from nearly 9% on average in 1992 to below 5½% at the present time. They were trading at one point this morning below 10-year German Government bonds for the first time for nearly 30 years - and they’ve been trading well below US Treasuries now for some considerable time. But more than that, we have also over the past seven years or so enjoyed the longest period of uninterrupted, quarter-by-quarter, economic growth in the UK as a whole since quarterly records began in 1955. Annual growth since 1992 has in fact averaged 2.8%, which is between ¼ and ½% above most estimates of our long-term underlying trend rate. We have also enjoyed an almost continuous month-by-month fall in the rate of unemployment, on a claimant count basis, from a peak of some 10½% at the end of 1992 to the present rate of just over 4% (or a little below 6% on the LFS measure). That is the lowest rate of unemployment since early 1980. And, finally, the number of people in employment is currently around the highest number on record. I know that initially there were those who feared that low inflation could only be achieved at the expense of slow growth and high unemployment - and that may still be why some of you rejected low inflation as the overriding objective of monetary policy on the first vote. I think the facts demonstrate that this certainly need not be true.
Today, we can look back on a period of more than five years in which the ECB has successfully pursued a stability-oriented single monetary policy serving more than 300 million citizens. And we all have the tangible proof of Monetary Union in our pockets, following a highly successful cash changeover process, which represents another historic milestone in the process of European integration. With the euro, this network of interrelations and mutual dependencies in Europe has undoubtedly reached a new level. When talking about the possible political implications of the euro, there are fundamental questions about the future of Europe to be answered, and I hope that my subsequent remarks will provide some interesting insights. Can Monetary Union function properly without some form of political union? Is a “currency without a state” a viable construct? Indeed, the question of whether a single currency requires - or inevitably leads to - a single state is hotly debated. I think that one of the reasons for this confused state of affairs is that “political union” is a rather abstract concept. It can mean different things to different people. On the one hand, political union can be broadly understood as a dense network of integrated policies, common rules and established  BIS Review 45/2003  1  procedures, as a union with strong and active supranational institutions, with common symbols and a common identity. The European Union already exhibits many of these features.

Having been instrumental in laying the foundations for the euro, the principles of the Maastricht Treaty will remain vital for the successful functioning of EMU. The medium-term macroeconomic policy framework laid down in the Maastricht Treaty has contributed to a stable macroeconomic environment, and will continue to do so. In addition, the Treaty provides for a clear allocation of responsibilities between EU institutions and Member States, as well as clear mandates for all involved. The maintenance of price stability (the ECB’s primary objective), the independence of the Eurosystem and the provisions safeguarding fiscal discipline, in particular as enshrined in the Stability and Growth Pact, are among the hallmarks of this framework. Furthermore, the path towards participation in the euro area mapped out in the Maastricht Treaty, focusing on sustainable economic convergence as a prerequisite for adoption of the euro, will also serve to guide prospective Member States. The name “Maastricht” will therefore always be connected with the euro and will forever have a prominent place in the history of Europe. When the Maastricht Treaty was ratified ten years ago, many doubted whether EMU would ever amount to more than the solemn words of a Treaty or a laudable objective to be reached at some point in the distant future. However, during the 1990s, policy-makers, governments, central bankers and other political and economic agents showed great resolve and determination to ensure that the single currency would become a reality.