samchain/econo-pairs-v1 huggingface dataset:
A fixed-rate, full allotment overnight reverse repo facility is a facility in which the Federal Reserve posts a fixed interest rate and accepts cash from counterparties, which include banks, dealers, money market funds, and some government sponsored enterprises (GSEs),  5  The Desk has been conducting operational readiness exercises for the use of reverse repurchase agreements since late 2009. At the most recent FOMC meeting last week, the FOMC authorized the Desk to begin another testing program which begins today. See the Desk’s September 20 announcement of the next round of testing. 6  BIS central bankers’ speeches  on an overnight basis in return for a security. If implemented, the facility would be “full allotment” – that means the facility would have no cap on the amount of funds accepted from any of its counterparties at the posted overnight interest rate.6 The repo facility is “reverse” because the direction in which the funds and securities move – participants are lending funds to the Fed rather than vice versa. Users of the facility are making the economic equivalent of an overnight collateralized loan of cash to the Federal Reserve. The amount of funds invested in the facility is likely to be sensitive to the posted interest rate. The higher the interest rate relative to comparable money market rates, the greater the participation is likely to be and vice versa. There are several reasons motivating our interest in developing such a facility.

Before he does so, I would like to share with you my assessment of economic conditions on the mainland and in Puerto Rico. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee (FOMC) or the Federal Reserve System. National economic conditions The mainland U.S. economy has continued to slowly recover from the after-effects of the housing boom and bust and the financial crisis. But the recovery has been disappointing. Despite a monetary policy that has been extraordinarily accommodative by historical standards, the economy has grown only about 2 percent over the past year. After a brighter start to the year, economic momentum has slowed in the last few months. (This may partly be a payback for the mild winter, which brought forward some spending.) Employment growth remains positive, but has slowed considerably of late as the economy has lost forward momentum, and the unemployment rate remains elevated. The headwinds retarding recovery are well known. Many consumers have been deleveraging in response to the large losses in wealth generated mainly by the collapse in home prices. The supply of credit – particularly mortgage credit – to many families remains constrained, limiting the degree to which many households can fully benefit from low interest rates. Although there have been some positive signs in the housing market recently, housing activity nevertheless remains at very low levels.
5  This is discussed in detail by my former MPC colleague, Stephen Nickell in ‘Why Has Inflation Been So Low Since 1999?’  6  Estimates from Kenneth Rogoff, ‘Globalization and Global Disinflation’, paper prepared for the Federal Reserve Bank of Kansas City conference on ‘Monetary Policy and Uncertainty: Adapting to a Changing Economy’ Jackson Hole, WY, August  2  BIS Review 70/2006  decline has been particularly marked in Africa, Latin America and the transition economies but is also significant in the UK and other developed countries. None of this makes monetary policy any less important. Ultimately inflation in the UK is a product of our monetary policy. Inflation would certainly reappear if we relaxed. But the disinflationary pressures from the Far East and elsewhere have made our job easier. In the UK, interest rates are set to deliver the inflation target. If there is disinflationary pressure from the rest of the world then that allows us to set lower interest rates (and accommodate a higher rate of price increases in services) than would otherwise have been the case. Thus the consequence is lower interest rates as well as low inflation. Prospects for UK inflation That leaves the question whether that benign trend is likely to continue in the future. Over the past year, the downward trend in the prices of imported goods has stopped and import prices have started to rise, even after excluding oil and erratic items (Chart 4).

In other words, they have taken account of the effect of higher import prices in depressing the real incomes of their customers and curtailed price increases on their own products to avoid losing sales. This all suggests that in an economy with well-anchored inflation expectations, relative prices adjust quickly to maintain the overall rate near target; with domestic price inflation, for example, moving in the opposite direction to import price inflation. In effect, where the target is credible, the market adjustments to relative prices will do most of our work. That is another reason for paying very close attention to inflation expectations. The MPC has been successful over the years in maintaining inflation expectations at a rate broadly consistent with the inflation target. Anchoring expectations in this way is important because it prevents the wage-price spirals that were a key part of the inflation process in the past. If wage and price setters believed that inflation was going to rise above the target, then they would make some allowance for this in setting  28-30, 2003. The Bank for International Settlements has also emphasised the ‘increasing global character of the inflation process’, see BIS Annual Report 2006. BIS Review 70/2006  3  current wages and prices. That would add to current inflationary pressure, requiring higher interest rates to control it.
Michael Gondwe: Facilitating trade and building economies on the African continent Opening remarks by Dr Michael Gondwe, Governor of the Bank of Zambia, at the African Trade Insurance Agency Workshop for Bankers, Lusaka, 10 September 2013. *  *  *  The Secretary General of COMESA, H.E Sindiso Ngwenya; The Director General of Zambia Development Agency, Mr Andrew Chipwende; The ATI Chief Investor Relations Manager, Mr Cyprien Sakubu; The Representative for Zambia, Mr Pizzaro Lukhanda; Resource Persons; Distinguished Invited Guests; Members of the Press; Ladies and Gentlemen. It is my honour and privilege to be amongst you all this morning. I wish to express my appreciation to the African Trade Insurance Agency for extending an invitation to me to deliver a keynote address on this important Workshop. Let me begin by commending the African Trade and Insurance Agency (ATI) for the important role they continue to play in facilitating trade not only in this Country but in the entire Region and indeed the Continent at large. I am no stranger to the role that ATI plays in helping to build economies in the countries that it operates as I have been a client and a supporter of ATI’s products and services in particular in my previous life as Head of the PTA Bank. I have seen first-hand, the impact that ATI has had in many countries, including in Zambia, where ATI has facilitated trade and investments worth more than $ million since its inception.

The Bank of Zambia therefore welcomes this Workshop as it bodes well with our strategic objective of increasing access to financial services to 50% of the population by 2015 from the current level of 37.3%. As I conclude, I want to assure ATI that the proposal for the Bank of Zambia and all Central Banks in the COMESA Region to relax the capital reserve rules, by considering applying a lower risk weight on transactions that banks and financial institutions have insured with ATI is receiving active consideration within the organs of the COMESA Central Bank Governors. Let me commend ATI for coming up with this innovative initiative which seeks to deepen our financial markets. Finally, I challenge all of you this morning, especially participants from commercial banks to explore ways on how you can improve your products and services to better serve the entire Zambian population with the products that ATI will present to you this morning. Distinguished Guests, Ladies and Gentlemen, it is now my pleasure to declare the African Trade Insurance Agency’s workshop for bankers officially opened and I wish you fruitful deliberations. I thank you for your attention. 2  BIS central bankers’ speeches
A shift from the public sector to the private sector most probably entails an increase in productivity throughout the economy. One complication in this context is that, for technical reasons, it is difficult to measure productivity growth in the public sector in the National Accounts. The studies that have been carried out indicate that it is lower in the public sector than in the private sector.1 So far, the statistics are quite simply based on the assumption that there is no productivity increase in the public sector at all. Another important change in the significance of different sectors in the economy was the rapid expansion in the information and communications technology sector, particularly during the second half of the 1990s. There has been lively discussion of the actual significance of information technology for productivity growth in this period. What we can see, is that a large part of the productivity growth during the latter part of the 1990s originated from the sectors producing information and telecom products. Compared with this IT-producing sector, developments in the IT-using sectors was not at all as impressive, despite large investments in IT during the period. 1  SOU 2004:19, Long-term Planning Commission Report 2003/04, Ministry of Finance, Fritzes, Stockholm. BIS Review 64/2004  3  What does all this mean for future long-term productivity growth?

The model-based predictions can be interpreted as the probability that the economy is in a precrisis period. The chart shows estimated crisis probabilities for the US, Spain, Norway and the UK. The band reflects various combinations of explanatory variables and trend estimation methods. 3 The dataset covers the period from 1970 to 2013, with a total of 27 events defined as crises, of which 11 are associated with the financial turmoil in 2008–2009. As you can see from the chart, the estimated probability of a crisis increased markedly in the years ahead of the financial crisis in 2008–2009, although the UK is the exception in that context. Crisis probabilities also increased in the US ahead of the US Savings and Loan crisis, in the UK ahead of the UK’s small-bank crisis and in Norway ahead of the banking crisis in the late 1980s and early 1990s. All these episodes featured rapid growth in credit and rising real estate prices. 2  See Anundsen, A.K., F. Hansen, K. Gerdrup and K. Kragh-Sørensen (2014): «Bubbles and crises: The role of house prices and credit», Norges Bank Working Papers 14/2014. 3  The indicators are incorporated in growth form or as deviations from estimated long-term trends. 2  BIS central bankers’ speeches  The empirical results support our choice of key indicators of financial imbalances. Household and corporate credit, house prices and banks’ wholesale funding ratio are statistically significant in the models and clearly influence the estimated probability of a crisis.
Why does this historical detour matter? The five or six years since the outbreak of the financial crisis have seen signs of a reversal of some aspects of the greater openness we had seen in the 1980s and 1990s. And probably none more so than the decline in crossborder bank lending. Moreover, the UK experience in terms of lending has been amongst the more pronounced. But again, does this matter? My answer is yes. First, because many of us do believe in the economic benefits of free trade and capital flows, as well as the contribution of migration to balancing supply and demand in the economy. Second, and closer to home, the City of London and its financial markets benefit hugely from, and are at the hub of, the open world economy. For example, whatever you think about the more troublesome recent innovations of banking, basic trade finance remains a core, simple and essential service provided by banks, and the City has for a very long time been a leading centre for providing this finance to support world trade. International wholesale banking is therefore an important part of maintaining and developing the world economy, just as it was in the nineteenth century. Yet, we have to recognise that in the last five or six years of the crisis we have gone backwards. Cross-border bank lending has declined more sharply than overall lending – home preference has set in.

If the problem is supply we know for sure one thing: fewer firms will have access to credit, some will be in trouble and will fail due to this fact; after many of these firms fail one can naturally state that there is no demand for credit. That is why it is so important to take care of supply problems. In doing so, policy mistakes should be avoided. It would be a mistake to simply state that a major policy target is to restart funding. That would be relatively easy to achieve, by the way: by funding expensive projects with public funds, independently of their quality. It would also be a mistake to try to boost artificially any specific financial instrument. Instead, the route towards a better financial system is one characterized by a level playing field for all types of finance, with specific choices left to borrowers and savers. The tax system should also not discriminate, i.e., it should treat symmetrically equity and debt, so that firms decide on the funding source regardless of the tax advantage of one over the other. Creating this level playing field will most likely lead to a more balanced and diversified financial system, i.e., with more options for savers and borrowers. This competitive environment is key to maintaining financial markets in constant improvement, characterized by innovation that responds to the insufficiencies of the existing instruments. Ideally, restrictions to the development of any type of finance should always be clearly justified on efficiency grounds.
That is a perfectly fair argument. The Committee’s mandate, as given to us by the Government, is an inflation target of 2% at all times. The onus is on us to explain why, in the face of persistently above target inflation, we are not tightening policy. My current approach to policy is based on the judgement that as long as these price level shocks aren’t repeated, and aren’t reflected in medium-term inflation expectations or wage setting, they are unlikely to have implications for inflation in the medium term. They lead to an increase in the level of prices, not to a persistent increase in inflation. If a significant degree of spare capacity persists in the medium term, inflation is likely to fall below target. The current focus of monetary policy is on providing the stimulus necessary to support the recovery so the degree of spare capacity in our economy is gradually reduced. That is critical if we are to hit the inflation target in the medium term. To have tried to have used monetary policy to offset the impact of these price level shocks on headline inflation would have required us to have tightened monetary policy in the depths of the recession. That would have led to an even bigger fall in output, an even bigger rise in unemployment, and an even bigger risk of materially undershooting the inflation target in the medium term. But there are clearly significant risks to this strategy of looking through the temporary impact of price level shocks on inflation.

The first years of our democracy were marked by economic difficulties, partly resulting from the international crises linked to sharp oil price increases and the lack of an anchor for inflation expectations in most developed countries. Nevertheless, this new Spain, democratic and integrated into Europe, never stopped looking outwards. Trade and financial flows and the movement of capital increased, and exports and imports rose from accounting for roughly 35% of GDP in 1986 to 66% in 2017. These steps towards modernisation would never have been possible without a society that was convinced of the fact that Europe represented prosperity and the future. The pro-European nature of civil society united Spaniards more strongly than their ideologies or political affiliations, and this sentiment has held firm despite the difficulties people experienced during the financial crisis. A recent survey by the Elcano Royal Institute shows that eight out of ten Spaniards believe that opening up markets provides Spanish businesses with good opportunities2. This is resounding proof that Spain benefits from the European Union in general, and the Economic and Monetary Union created by the euro area in particular. The annual growth in per capita income between 1977 and 1985, one year before Spain joined the EU, was 0.7%, well below the 1.8% enjoyed by the countries that would go on to form the euro area. However, between 1986 and 1998, before the euro was introduced, Spain’s per capita income grew at an extraordinary annual rate of 2.7%, above the average for future euro area countries of 2.1%.
One way of answering this question is to look at the macro picture and determine the trend rate of GDP growth that would be commensurate with such a strong increase in corporate earnings. This is also pertinent in the context of the current discussion about a “new economy” that is perceived as being capable of higher productivity growth and thereby an upward shift in potential GDP growth. A simple growth model shows that in order to justify a P/E ratio between 30 and 35, the growth trend for total factor productivity would have to move up almost 3 percentage points.4 That in turn implies 4  The feasibility of a higher future increase in corporate earnings can be analysed with a simple model where GDP growth is determined by the inputs of capital and labour together with the efficiency with which these resources are utilised in production. Using a simple Cobb-Douglas function, the rate of increase in the return to capital can be derived as gR=gA+(1-a)(gL-gK), where gA, gL and gK are the growth rates for total factor productivity, labour and capital, respectively. The relevant factor in the present context is the return to capital (the flow of income to owners of the capital stock in relation to the value of the stock) because this should be linked to the growth of corporate earnings.

Today, however, the situation in Sweden does not resemble what happened in the second half of the 1980s. Asset prices have certainly risen strongly in recent years but credit has not grown to the same extent. It seems that, at least to date in the present upswing, Swedish banks and their customers have taken a different line on the provision of credit and borrowing. Everyone is hopefully more accustomed to a deregulated credit market than was the case in the late 1980s. Still, it is important to be alert to the future path of asset prices and credit aggregates, as well as to the underlying forces at work in the Swedish economy. Real assets prices and total lending 270  1,6  240 1,4 210 180  1,2  150 1,0 120 0,8  90 1970  1975  1980  1985  1990  1995  Ass et p rice in d ex: 1980= 10 0 (left scale) L en d in g in p e r c en t o f G D P (rig h t s cale) S ource : R iksbanke n  capital in an economy is dependent on the level of output and how this income is shared between labour and the owners of capital.
The Banque de France played a central role in setting this agenda, notably through the creation of the Network for Greening the Financial System (NGFS) and its global secretariat. 3. The ECB also intends to step up its communication. As I often stress, communication is 1/5  BIS central bankers' speeches  fundamental for economic efficacy and for the transmission of monetary policy to all economic agents. Better-informed households and firms will also make better economic decisions. Our inflation targeting policy will be much more effective if economic agents understand it, adhere to it and believe in it, thus helping to better anchor inflation expectations. To this aim, a first step is our new Monetary Policy Statement, which is shorter and provides a clearer narrative of why we took our monetary policy decisions. Since effective speaking also means active listening, the Banque de France organised 17 listening events this year, both at national and regional levels, reaching out more than 300 000 French citizens. We discussed our mandate, the principles of monetary policy, and the effect of monetary policy on their daily lives. I have decided to make this an annual event. II. The current and future courses of inflation Let me now turn to the economic outlook. The robust euro area recovery has been helped by a successful combination of accommodative monetary and fiscal policies, both at national and EU levels.

Last but not least, in July the Governing Council updated its forward guidance on interest rates to bring it into line with the new definition of price stability. We agreed to reflect later – that is to say in December - on whether to adjust our forward guidance on the APP. 3. The lessons of TLTRO III and the two-tier system My last point concerns the articulation of long-term liquidity provision and negative interest rates. The third round of targeted long-term refinancing operations (TLTRO III) has proved to be a powerful tool during the Covid crisis to avoid a credit crunch to the private sector. As the euro area financial system is mainly bank-based, our future actions must continue to support bank lending to businesses and households as the recovery evolves. I am therefore in favour of keeping this funding instrument as a liquidity backstop in some form in the future, also to avoid possible cliff effects related to future repayments. However, I think that a careful recalibration of its pricing is required. Now that the recovery is well underway, the generous pricing of TLTRO - lending rates can be up to 50 basis points below the average deposit facility rate since April 2020 - is no longer justified. The present calibration of TLTRO pricing clearly provides riskless arbitrage opportunities for banks.