samchain/econo-pairs-v1 huggingface dataset:
2  However, economic theory indicates that under an optimal precommitment policy, it will under some circumstances (e.g. after a cost push shock) be optimal to keep both the inflation gap and the output gap negative or positive for some time ahead, see for example Walsh, Carl (2003): Monetary Theory and Policy, Second Edition, MIT Press, Cambridge, MA. 2  BIS Review 26/2006  interest rate path. In both scenarios it is assumed that it takes time to identify the causes of developments and to adjust policy. Beyond such specific scenario analyses, in the Inflation Report we also discuss more generally possible consequences of more severe disturbances to the economy. The interest rate should normally be changed gradually so that we can assess the effects of interest rate changes and other new information. Thus, we started increasing the key rate from a low level of 1.75 per cent last summer. Thereafter, the interest rate has been increased in small increments of 25 basis points to 2.5 per cent. Interest rate policy must also be assessed in the light of developments in property prices and credit. A build-up of financial imbalances may influence future inflation and output. In recent years, house prices and household debt have increased sharply in several countries and in our country as well. Growth in housing investment moved up further in 2005 from the record-high level in 2004.

We must always bear in mind that monetary policy is not an “exact science” based on well-defined natural laws. It is not possible to fine-tune the interest rate to attain the objectives with high degree of precision. Irrespective, the criteria for a good interest rate path provide a guide for our interest rate policy. 4. Inflation volatility, deviations from the inflation target and external shocks Inflation adjusted for energy prices and taxes has been low in Norway in recent years. It has risen somewhat, but it is still considerably lower than the target of 2.5 per cent. BIS Review 26/2006  3  Inflation has been and is still being restrained by the fall in prices for imported consumer goods, an unexpected high level of competition in domestic markets and increased cross-border labour flows. The trend in prices for consumer goods and services over the past two or three years is a result of favourable developments in the Norwegian economy. Low inflation is being accompanied by real income growth and a rise in production and is not the result of declining demand, activity or employment. Deviations from the inflation target in Norway have been somewhat higher than in other countries, which may partly reflect the degree of openness of our economy. Chart 12 shows deviations from target and the degree of openness. The higher the columns, the larger the deviations are from target. The lines indicate the degree of openness.
Despite the global financial crisis and European sovereign debt problems, the Islamic capital markets have shown unparalleled resilience over the past few years. In particular, the sukuk market climbed to new heights for the fourth year in a row, with global sukuk issuance exceeding $ billion in 2012, three times higher than that before the global financial crisis.2  1  Source: KFH Research. 2  Source: KFH Research. BIS central bankers’ speeches  1  Strengths of Hong Kong in developing Islamic finance 6. Hong Kong is well positioned to add momentum to the globalisation of Islamic finance. As a free and open economy and major international financial centre, Hong Kong has developed a highly liquid and deep capital market with a strong presence of international financial intermediaries and a diverse base of borrowers and investors, a well-established financial infrastructure, a sound legal system, a transparent regulatory framework and a simple tax regime. 7. In addition to these general capabilities in financial intermediation, Hong Kong can play a unique and pivotal role in bridging the investment needs from the Middle East and the funding needs in Mainland China. 8. Many Middle East investors are now actively looking for investment opportunities beyond their domestic borders to diversify their investment portfolios. This trend has been supported by the huge pool of oil-driven liquidity in the Middle East.

These would lead all euro-area countries to introduce at home reforms experimented in another economy of the area that meet the following three criteria: first, they are the subject of a multipartisan consensus; second, they have been implemented on the basis of an agreement between the social partners; third, they have actually helped create jobs. The Council does not doubt the fact that France, like all the economies of the euro area, could benefit greatly from the extension of such consensual and effective reforms. The competitiveness of the economy Last, as it has done in each of the previous years, the Monetary Policy Council emphasizes the importance of cost containment in the economy and the need to provide an environment that favours the competitiveness of businesses. In Europe, before the single currency, any poorly conducted national economic policy was swiftly and severely punished by depreciation of the currency on the foreign exchange markets and rises in market interest rates. With the creation of the single currency, these indicators have disappeared along with the swiftly applied sanctions associated with them. In the new euro area, any economic policy errors leading to lost competitiveness would result, more slowly and insidiously, in weaker growth and job creation. For this reason, even more so than in the past, unit production costs and more generally the quality of the competitive environment of businesses need to be very closely monitored.
The citizens of Texas and the Eleventh Federal Reserve District operate under the same monetary policy as do the rest of our fellow Americans. We have the same mortgage rates, pay the same rate of interest on commercial and consumer loans, and earn returns and borrow at the same interest rates as do our brethren in the rest of the country. Which raises an important question: If monetary policy is the same here as everywhere else in the United States, why does Texas outperform the rest? The answer is no doubt complicated by the fact that we are blessed with a comparatively great amount of nature’s gifts, a high concentration of military installations and other “unfair” advantages. But one cannot avoid the conclusion that one of those “unfair” advantages is that we have a Legislature, based here in Austin, that under both Democrat and Republican governors has over time crafted laws and regulations that encourage business expansion and job creation. They have conducted the fiscal affairs of the state so as to maintain confidence in the future. One might draw two lessons here: first, that Germany’s finance minister, Wolfgang Schäuble, is right when he says, “If you want more private demand, you have to take people’s angst away” by having responsible and disciplined fiscal policy;4 and second, that fiscal policy either complements monetary policy or retards its effectiveness as a propellant for job creation.

In the United States and in this country, for example, inflation has been BIS Review 22/1997  -3-  contained to around 3% with continuing growth and low or falling unemployment. And this pattern looks set to continue. In Japan and on the Continent of Europe, on the other hand, while inflation has been even lower, activity has been disappointingly weak, and unemployment on the Continent at least has risen to quite frightening levels. And while there is now the prospect of a moderate pick-up in activity in these countries, that is not yet assured. Japan, which is in many respects a unique case, faces substantial fiscal consolidation. And in Europe, too, the prospects are clouded by pressure to bring budget deficits down sufficiently to meet the Maastricht convergence criteria this year, notwithstanding the weakness of the domestic economies, and in an environment of longer term structural inflexibility. These divergent developments go a long way towards explaining recent differences in the behaviour of both bond markets and exchange rates. In both the United States and the United Kingdom the sustained expansion of domestic demand and of ouput has generated market expectations of an essentially cyclical rise in short-term interest rates. Sluggish economic activity elsewhere, on the other hand, means not only that short-term interest rates are significantly lower in Japan and the core European countries; but it also means that they are thought, by the market, to be less immediately likely to rise.
This uncertainty principal is often referred to by central banks and can be one reason why they are sometimes perceived as “sluggish” in their behaviour. References Andersson, Björn, Vesna Corbo and Mårten Löf (2015), “Why has inflation been so low?”, Economic Review 2015:3, Sveriges Riksbank. Apel, Mikael, Marianne Nessén, Ulf Söderström and Anders Vredin (1999), “Different ways of conducting inflation targeting – theory and practice”, Sveriges Riksbank Quarterly Review, 1999:4, Sveriges Riksbank. Brainard, William (1967), “Uncertainty and the effectiveness of policy”, American Economic Review Papers and Proceedings 57. Cunliffe, Jon (2017), “The Phillips curve: lower, flatter or in hiding?”, speech, Oxford Economics Society Tuesday, 14 November 2017. De Rezende, Rafael B. (2017), “The interest rate effects of government bond purchases away from the lower bound,” Journal of International Money and Finance, 74, 165–186. De Rezende, Rafael B., and Annukka Ristiniemi (2018), “A shadow rate without a lower bound constraint”, Sveriges Riksbank Working Paper 355. Faust, Jon and Eric Leeper (2015), “The myth of normal: the bumpy story of inflation and monetary Policy”, in Inflation Dynamics and Monetary Policy, symposium organised with the support of the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming. Greenspan, Alan (2003), “Opening remarks”, Monetary Policy and Uncertainty: Adapting to a Changing Economy, symposium organised with the support of the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming. Hansson, Jesper, Marianne Nessén and Anders Vredin (2018), “The storm after the calm – Lessons for monetary policy analysis”, Economic Review 2018:4, Sveriges Riksbank.

In the long run, when inflation is on target and resource utilisation is at its long-term sustainable level, the Taylor rule can be described as follows, 𝑅𝑅𝑡𝑡 = 𝑅𝑅� = 𝒓𝒓∗ + 2,  where 𝑅𝑅� refers to the long-term level of the policy rate and 2 is as before the central bank's inflation target. The long-term policy rate is thus equal to 𝒓𝒓∗ plus the inflation target. If the inflation target is constant, the long-term policy rate, in practice the average policy rate, is determined by 𝒓𝒓∗ . For instance, if 𝒓𝒓∗ declines it means that the policy rate’s long-term (average) level declines at the same pace. We have seen a trend decline in international 𝒓𝒓∗ over a longer period of time, which is an important factor behind the low interest rates in Sweden. I will return to this later. Resource utilisation's long-term sustainable level also plays an important role for monetary policy, but in a slightly different way. The long-term level of the policy rate is namely not affected by 𝒚𝒚∗ , on the other hand, the variations around the long-term level of the policy rate are affected. A simple example can explain why this is the case. Let us assume that resource utilisation is equal to 𝒚𝒚∗ initially and that 𝒚𝒚∗ then rises to a higher level. Resource utilisation is then lower than its long-term level, that is, resource utilisation can be said to be lower than “normal” and we have “an economic downturn”.
As I hope I have demonstrated, the Bank is making strides to close this gap in a fair and sustainable manner that empowers all colleagues at the Bank. Nonetheless, the disclosure helps everyone to track progress and hold the Bank to account. To that end, HR publishes diversity metrics by division every quarter. The internal committee of Governors as well as the Court of Directors (the equivalent of our Board) regularly review and discuss the Bank-wide and divisional figures to identify areas for improvement. In 2018 we were also one of the first organisations to conduct and publish a special Cognitive Diversity Survey to gain a better understanding of how our colleagues feel about working at the Bank. The survey measured seven inclusivity metrics including interpersonal interactions, flexible working, communication with leaders as well as recruitment and promotion, and results are cut across twelve different aspects of diversity. Our results indicate colleagues are generally positive about inclusiveness at the Bank on every metric measured by the survey. 80% of colleagues in our annual employee survey reported that the Bank takes diversity seriously, seven percentage points higher than the UK average. And 87% of Bank colleagues say they are treated with respect as an individual, six percentage points higher than the UK average. These survey results and the progress against our targets are encouraging, but there is always more to do. And diversity is, of course, about more than gender, including ethnicity, age, disability, sexual orientation and socio-economic background.

These are the role models for the next generation. 8  All speeches are available online at www.bankofengland.co.uk/news/speeches  8
It provides liquidity support to UK banks on terms which depend on their lending to the UK economy, thereby acting as a direct incentive to stimulate new lending. The FLS bears some resemblance to the second phase of cold storage. The SLS and FLS may be less famous than JLS, the London R&B boy-band. But they are an important recognition of the Bank’s role in supporting credit intermediation. That role began in the early part of the 20th century with schemes like cold storage. The Bank’s role had expanded beyond its own doorstep, on which the banks stood, to the doorsteps of households and companies up and down the country seeking credit. Supporting financial infrastructure Yet one thing at least had stayed the same: in 1914, the Bank had only acted when jolted into doing so by war. Its role was still as crisis-container rather than preventer. During the 1920s and 1930s, the Bank of England became Montagu Norman’s Bank. And Norman set about changing that. Norman was not Cunliffe’s greatest fan and the feeling was clearly mutual. “There goes that queer-looking fish with the ginger beard again”, Cunliffe is said to have observed about Norman. “Do you know who he is? I keep seeing him creep about this place like a lost soul with nothing better to do.”7 Nor would Norman necessarily have ingratiated himself to today’s army of Bank economists.

It came care of fixing the exchange rate – first to gold under the Gold Standard and latterly in the post war period to the dollar. With the demise of the dollar standard in the early 1970s, however, the exchange rate anchor had been tossed overboard. At the Bank of England, as elsewhere, the search was on for a new nominal anchor. Into this vacuum stepped Andrew Duncan Crockett. Crockett joined the Bank in 1966 as a graduate entrant, just before the break-up of the Bretton Woods dollar standard. He set to work on the biggest problem of the day, locating a new nominal anchor. In so doing, he began working alongside another young(ish) new Bank entrant, Charles Goodhart. The result was a joint paper published in the Bank’s Quarterly Bulletin in June 1970. It was titled “The Importance of Money”.11 Re-reading it now, it was a prophetic piece of work. In the UK, it laid some of the analytical foundations for what, during the late 1970s and 1980s, became monetarism. More than that, the paper placed commercial bank money and credit at the centre of the macro-economy. It could as well have been titled “The Importance of Credit” or indeed “The Importance of Banks”. After a successful spell at the IMF, Crockett returned to the Bank of England in 1989. In 1994, he then became General Manager of the Bank for International Settlements, the central banks’ central bank. In central bank circles, change was in the air.
Obviously, I am not going to analyse here our cultural preference for home ownership, although I will say that, in my opinion, there are both positive and negative aspects to this. On the positive side, ownership affords households greater stability and financial security 3/15  for retirement. As a matter of fact, our home often represents the main part of our “savings” when the time comes for us to retire. Evidently, this tendency also has a less positive side. For instance, it is an obstacle to personal and professional mobility at different stages of life and reduces the proportion of savings we hold in the form of financial products. At any rate, buying a home is one of the most important financial decisions in a person’s life and, in many cases, our biggest investment, which normally requires financing and means entering into a long-term payment commitment with a lending institution. As the financial crisis has painfully reminded us, this long-term commitment is a potential source of problems at times of financial instability or job insecurity. Let me remind you that the mortgage market has historically given millions of individuals access to owner-occupied housing. Also worth mentioning is the fact that mortgage lending fared relatively well during the crisis, with the average default rate of residential mortgages remaining below 6% at all times. In contrast, that observed in the real estate development and construction segment reached levels of more than 36%.

21.03.2019  Closing remarks Event on the “Impact of the new law on real estate credit”/PWC Margarita Delgado Deputy Governor  Good afternoon, I would like to thank PWC for kindly inviting me to speak at the close of today’s event on the new real estate credit law. I shall try to speak about the most innovative features of the new law from the supervisor’s standpoint, not dwelling too long on the details of the legal changes introduced, as I am sure that they have been widely discussed over the course of the morning. Specifically, I shall focus on the three features of the new law that strike me as particularly important from a supervisory viewpoint: (i) the emphasis given to customer protection, (ii) the need to ensure legal certainty for the mortgage market to function properly and (iii) the growing importance of credit conditions. I shall also refer to the potential short and mediumterm consequences of this law for access to owner-occupied housing, and shall conclude with some thoughts on how the new macroprudential tools may shape the way we supervise certain banking businesses, notably real estate lending. Introduction  As we know only too well, access to home ownership is an issue of great concern to Spanish society. Worldwide, Spain has traditionally been among the countries with the highest owner-occupancy rates. Although this rate has declined from the peak reached in 2002, it is still higher than in other European countries.
However, with the recent passage of the Economic Growth, Regulatory Relief and Consumer Protection Act, many of these will no longer be subject to DFAST supervisory stress testing or could 2/6  BIS central bankers' speeches  participate only on a periodic basis. The very largest and most systemically important firms, including all domestic bank holding companies with assets exceeding $ billion, will continue to be required to participate in DFAST supervisory stress testing on an annual basis. These recent changes are consistent with an emphasis on structural macroprudential concerns, in that they focus the DFAST stress tests on the set of firms that are individually the most systemically important. The intention seems to be to balance the burden of the supervisory stress testing regime against the negative impact that distress at one of these firms could cause to other banks and the rest of the financial system—part of the broader tailoring of the regulatory framework to the size and risk profile of different types of institutions.3 At the same time, however, reducing the set of firms subject to annual DFAST supervisory stress testing seems less consistent with cyclical macroprudential concerns, as it could narrow the window that stress test results provide on the build-up of risks and the loss-absorbing capacity of the banking system.

The Fed discloses descriptive information about the models, including the general statistical approach and key variables, but does not release the code or detailed equation estimates. Industry groups and individual banks have called for the Fed to release more detail about its models, including the specific formulas and equations.5 On one level, full disclosure of the Fed’s supervisory stress test models might seem like good public policy. Such disclosures would provide insight into how the stress test calculations are made, making the results predictable to the banks subject to the tests. Greater predictability of the stress test results could enhance banks’ ability to do capital planning, because any constraints arising from the supervisory stress test results would be known ex ante. Detailed 4/6  BIS central bankers' speeches  disclosures could also enhance the credibility of the stress test regime by allowing external parties to critique the Fed’s models, a form of “peer review” that could lead to improved modeling techniques or identify areas of emerging risk that the Fed’s models do not adequately capture. But these benefits could come at significant cost to the broader goals of the supervisory stress testing regime. My co-author, Til Schuermann, has argued that increased reliance on supervisory models, especially in the context of the CCAR program, provides powerful incentives for banks to abandon innovation in stress test modeling and instead devote their energy to mimicking the Fed’s models.