samchain/econo-pairs-v1 huggingface dataset:
Some mortgages have interest costs tied directly to Bank Rate but most are now fixed for at least two years. And these longer-term rates depend in their turn on expectations of how the short-term interest rate evolves over the future. So they matter. Equally, however, these expectations should – and generally do – respond to the news about the economy of their own accord, without the need for any explicit prompting by the central bank. The private sector forms its own views about how the economy might evolve over the future, views that are continually adjusted as new information comes in. As long as people also understand the objectives of the central bank, and therefore the appropriate response of policy, they should then be able to work out for themselves what that news means for the likely path of interest rates. Sometimes, when economic conditions are relatively stable, there isn’t that much to work out, as one can observe the central bank’s “reaction function” – how it responds to incoming data – pretty much directly. In the years prior to the financial crisis, official interest rates in the UK  were very tightly correlated with economic activity (and exhibited very little dependence on anything else). Chart 1 is one way of representing that relationship: it plots the change in the average interest-rate vote on the MPC, in basis points, against a survey-based measure of economic growth[1]. At least until 2008 the correspondence was extremely tight.

This was the first, and I daresay the last, time that MPC members were likened to an elite sportsman. )[2]  Chart 2: Forward interest rates and economic activity also co-moved closely before the financial crisis, less so afterwards  Six-month rolling averages. Combined IHS Markit/CIPS and CBI distributive trades lagged one month. Six-month change in one-year forward one-year LIBOR rate, spliced onto one-year, one-year OIS rate in 2022. Sources: ONS, IHS Markit/CIPS, CBI, Bloomberg Finance L.P. and Bank calculations. So if financial markets are able to react this way, without any explicit hints from the policy maker, why has there since been more communication from central banks about future policy – and more expectation of it in financial markets? What is the rationale for “forward guidance”? At least in theory there are two distinct types of guidance. The reasons for both, I think, are connected with changes in the economy in recent years. But they are quite distinct and it’s important to understand how. The first – sometimes described in the economics literature (somewhat grandiosely) as “Delphic” guidance – seeks in general to convey what is sometimes referred to as “private information” held by the central bank. This makes it sound more exciting than it really is. More often than not it means making clear to the outside world the policy maker’s view of how the economy might evolve over the future – its forecasts – and to clarify the so-called “reaction function” (how monetary policy might respond to possible future events).
10  BIS central bankers’ speeches  Bernanke B., 2005, “The Global Saving Glut and the U.S. Current Account Deficit”, Remarks at the Sandridge Lecture, Virginia Association of Economists. Broadbent B., 2012, “Costly capital and the risk of rare disasters”, speech given At Bloomberg, London, http://www.bankofengland.co.uk/publications/Documents/speeches/ 2012/speech581.pdf Bunn P. and M Rostom, 2014, “Household debt and spending”, Bank of England Quarterly Bulletin No. 304. Eggertson G. and P Krugman, 2012, “Debt deleveraging and the liquidity trap: a FisherMinsky-Koo approach”, The Quarterly Journal of Economics (2012), 1469–1513. doi:10.1093/qje/qjs023. Elsby M, B Hobijn and A Sahin, 2013, “The decline of the US Labour Share”, Brookings Papers on Economic Activity, Fall 2013. Friedman M. and A. J. Schwartz, 1963, “A monetary history of the United States 1867–1960”, National Bureau of Economic Research Joyce M., N. McLaren and C. Young, 2012, “Quantitative easing in the United Kingdom: evidence from financial markets on QE1 and QE2”, Oxford Review of Economic Policy, Volume 28, No. 4, pp. 671–701. Karabarbounis L and B Neiman, 2013, “The global decline of the labor share”, Quarterly Journal of Economics, 129(1), 61–103, February 2014. Keynes J. M., 1930, “A treatise on money”, New York, Harcourt, Brace and company. Miles, D., 2014, “The transition to new normal for monetary policy”, Speech given at Mile End Group, Queen Mary College in London and available at http://www.bankofengland.co.uk/publications/Documents/speeches/2014/speech707.pdf Woodford M., 2003, “Interest and prices”, Princeton University Press. BIS central bankers’ speeches  11

CEMFI is the outcome of the ambition of the leadership of the Banco de España in the late 1980s, who saw the possibility of innovating in the organization of a graduate programme comparable to the best programmes in Europe. It was Luis Ángel Rojo, at that time the Banco de España's Director General of Research, who invited Rafael Repullo to lead this venture. Precisely as a token of appreciation for his decisive contributions in the early days of CEMFI, the prize for the best Master student bears his name. The Banco de España is very proud of its ongoing support and collaboration with such a special institution providing first-class graduate education and research, contributing a host of public goods to the Spanish economy and generating valuable ideas for public policymaking. An excellent example of this collaboration is the co-organisation of the biennial Financial Stability Conference that concluded this morning at the Banco de España. Demonstrating an outstanding academic level and policy relevance, it has enjoyed the presence of a large number of distinguished visitors, including the Federal Reserve Board Chairman, Jerome Powell. Building on this example, I am pleased to announce a new collaboration between the Banco de España, CEMFI, and the Universidad Internacional Menéndez Pelayo, an annual conference on the Spanish economy, the first edition of which is due to take place next week in Santander.
Moreover, the disruptive potential of innovation is likely to exacerbate an already complex environment as decision-making becomes more opaque and new roles and responsibilities are introduced. For example, what will effective governance and risk management look like? Do artificial intelligence and machine learning introduce new model risk? Or operational risk? Or conduct risk? What does it mean to supervise or regulate conduct if decisions are made by selflearning algorithms? More broadly, what culture and conduct risk will be embedded in technology-driven financial services in the future? These are hard questions for financial firms and for the official sector, and our approach to the reform of financial industry culture will need to address them. Conclusions To return to the beginning of this discussion, culture reform in finance is a complex problem. Causal relationships are difficult to isolate, linkages are constantly changing, and accurate prediction is impossible. That does not mean that we are powerless, or that we should accept complexity as an excuse for not trying to foster change. Rather, we need a long-term commitment that brings the appropriate tools and approaches to bear. The costs and potential consequences of market failures associated with misconduct risk and culture suggests that it is vitally important that we do so. Both financial firms and the official sector should focus attention on investigating and asking questions to better understand the underlying drivers, motivations and risks behind the behaviors of individuals and groups.

Eddie Yue: Developing local-currency bond markets in Asia Statement by Mr Eddie Yue, Deputy Chief Executive of the Hong Kong Monetary Authority and Head of the Delegation of Hong Kong, at the 45th Asian Development Bank Annual Meeting, Manila, 4 May 2012. *  *  *  I would like to thank the Government of the Philippines for hosting the 45th Annual Meeting of the Asian Development Bank (ADB). I would also like to congratulate ADB on the successful conclusion of the Tenth Replenishment of the Asian Development Fund (ADF XI), which would provide critical resources to ADB to further its work in poverty reduction in Asia. The global economy has shown signs of improvement in 2012 following a marked slowdown amid the intensification of the euro zone debt crisis in the latter part of last year. Nevertheless, significant downside risks remain, with the euro zone debt crisis yet to be fully resolved and rising oil prices adding further uncertainty to the recovery outlook. Asia has remained resilient so far, in large part attributable to the reforms taken by regional economies over the years to strengthen economic fundamentals, improve fiscal discipline and enhance the resilience of their financial systems since the Asia financial crisis. Nevertheless, the region is not immune from the lingering fragility in the global environment. To date, the deleveraging by European banks has not caused significant short-term credit tightening in Asia, with banks in the region and elsewhere having stepped in to fill the gap left by European banks.
Its first order challenge would be to reach a judgment on whether the financial system was undermining its own resilience by getting carried away in extending credit in an environment of rising asset prices and optimism about future output levels. The FPC would need neither to obstruct an improvement in the underlying performance of the economy, nor let the party get out of control. But that is what Taking Away the Punchbowl is about. The same difficult judgments would face a combined monetary-and-macroprudential decision maker. And a separate monetary policymaker would have a shared interest in the downside risks to inflation not being exacerbated by the prospect of a credit bust following an unchecked boom. In those kind of circumstances, we should be helped by the tempo of the two endeavours differing. The FPC is less likely to make frequent course changes. That is reflected in its meeting routinely on a quarterly basis, contrasting with the MPC’s monthly meetings. So, as in the relationship between monetary policy and fiscal policy, the MPC will be able to take into account perturbations to aggregate demand from the FPCs interventions. Both committees are part of the Bank of England, so the executive of the Bank will ensure that there is a common information base. FPC members are invited to the monthly briefing for MPC members. And vice versa, consistent with MPC members already being free to attend the internal financial stability briefings established over the past year or so.

Finally, I would like to welcome the members of the Forum and its observers, and thank them in advance for committing to and participating in this exciting and important project. 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4
•  Permanent facilities providing bilateral liquidity insurance should be made available only to commercial banks, as they unavoidably need such insurance given that their liabilities are money and the vital role they play, as monetary institutions, in the economy and the financial system. (Private-sector institutions seeking to offer monetary (deposit) services should be regulated as banks. 13 )  •  Such public facilities should not be available to banks where in the judgment of the Bank there are serious question-marks over their viability or solvency. (That need not exhaust our menu for providing liquidity to individual firms. It is of course open to us to offer that via bespoke support operations. 14 )  13  This suggests, for example, that constant-NAV money market mutual funds should convert into banks or switch to being variable-NAV funds. Arguably, similar principles should apply to other non-bank banks. See Tucker PMWT (2009), “Remarks at the Turner Review Conference by Paul Tucker”, Bank of England. Paul Volker’s recent Group of Thirty report also argues for this. 14  This can be effected under the Tripartite Memorandum of Understanding between the UK’s Tripartite authorities (HMT, FSA and Bank).

I am also reliably informed that the facility will allow eligible companies access financing by assigning receivables for execution of contracts such as extraction and transportation of waste materials, transportation of copper ore from the pits to the smelting plants and contract mining. I have no doubt that the facility will go a long way in supporting Zambian companies grow and actively participate in the economic development of the country. The Fund will not only augment the supply of goods and services to the mining sector but also introduce important institutions that are critically needed to ensure that the supply system in the sector is efficient and sustainable in the long run. The USD 80 million in favour of the Export Fund of Zambia has come at a time when the Government is increasingly promoting the diversification of the economy through export led growth. Strengthening of the external sector performance has continued as evidenced by an improved balance of payments position. This has been on account of higher foreign exchange inflows emanating from increased metal and non-traditional exports earnings coupled with investor confidence in the Zambian economy. The nontraditional exports have continued to record unprecedented growth over the past couple of years. For instance, NTEs rose by 63.4% to US $ million in 2007 from US $ million in 2005 with commodities, such as, sugar, copper wire and tobacco, coupled with receipts from tourism making notable contributions.
The Deutsche Bundesbank and the rest of today’s Eurozone members (the former Exchange Rate Mechanism members) may serve as a useful example. By imposing the uncovered interest rate parity predicts that the pegging central bank either follows the interest rate policy of the leading central bank or faces significant pressure on its exchange rate. Well, this is exactly what happened, for instance, in the 1980s when the Banque de France tried to lower its interest rate below that of the Deutsche Bundesbank, and again at the beginning of the 1990s when the Bank of England and Banca d’Italia did not want to follow the policy tightening of the Deutsche Bundesbank. In both cases the opening of a negative interest rate differential created depreciation pressures on the exchange rate. As you may well know, the British pound and Italia lira were subsequently forced to abandon the Exchange Rate Mechanism. The existence of exchange rate crises and speculative attacks thus serves as clear empirical evidence in favour of the uncovered interest rate parity. In addition, recent empirical studies based on advanced econometric techniques and using intraday data have shown that when the historical data are used properly the result may support the uncovered interest rate parity concept. The exchange rate plays a crucial role for the Czech economy as well and is therefore an important part of our forecasting devices. And yes, the core forecasting model we use relies on the uncovered interest rate parity equation.

Indeed, it says no more than those profits must be equal across similar economies and that it is the deliberate search for the highest profit that makes them equal. Of course, the criticism is more sophisticated than just saying that something is not working. The critics argue that the empirical evidence on the non-performance of the uncovered interest parity is overwhelming. Yes, it is right that over recent decades much empirical testing has been done on historical data, most of it showing the poor ability of the uncovered interest rate parity to predict future exchange rate movements. It has even been shown that purely statistical models such as random walk outperform the uncovered interest parity in the short run. The question, however, is to what extent the tests were done correctly and more importantly to what extent is it at all possible to estimate a relationship that works with expectations using econometric techniques and historical data. Fortunately for the proponents of economic modelling based on microfounded economic relationships such as the uncovered interest rate parity, the history of monetary policy provides many examples of exchange rate crises and speculative attacks that clearly support the functioning of the uncovered interest rate parity. However surprising it may be, the majority of currency crises and speculative attacks were in fact caused by central banks overlooking the uncovered interest rate parity relationship. BIS Review 17/2007  1  Usually it starts with a central bank deciding to boost its credibility by fixing its currency to a respectable one.
Only in America could two sons of a once-homeless beggar and the daughter of a boardinghouse cook become what you see here on this stage today: One the distinguished chairman of the board of trustees of Bryant University, and the other a policymaker for the most important central bank in the world who is somehow deemed worthy of receiving an honorary doctorate and being chosen as speaker for the 151st commencement of this fine university. We are blessed to be Americans. 1  Westbrook: Surviving Australia’s Most Sadistic Reformatory, by William Stokes, Sydney, Australia: Macmillan by Pan Macmillan Australia, 2010. BIS central bankers’ speeches  1  The Sages of the Ages Now, the only thing that stands between you and receiving your Bryant degree is … me. I will speak quickly and take up just a few moments of your time before you celebrate your accomplishments. By now, you have taken enough writing courses to know the tongue-in-cheek definition of a good essay: It is a collection of other people’s thoughts disguised as your own!2 Most graduation speeches are no different. The standard routine for a commencement speaker is to dig through Bartlett’s or the Oxford Dictionary of Quotations or resort to Google and Wikiquote to find something said by some sage that will grace a graduation ceremony with a lesson students can take with them as they go off into this mysterious and challenging world.

In fact, even for countries such as the Republic of Macedonia, with relatively modest financial education and low utilization of modern technologies in the financial area, the question that arises is not whether, but when the digitization process will engulf the domestic banking system. In this light, I would like to point to the process of digitization and use of information technology not as a threat against the competition in banking, but as a new opportunity to bring financial services closer to as many clients as possible, to raise financial inclusion and literacy, and to ensure better allocation of resources, as phenomena of greater economic and social significance. 1/2  BIS central bankers' speeches  On the other hand, the application of new technological solutions brings changes in the range of risks that banks face and manage in their day-to-day operations. In addition to the conventional bank risks such as credit risk, interest rate risk, currency risk, the importance of non-financial operational risks will gradually increase. Increased use of modern technical solutions will mean greater significance of the risks related to the information systems security, the confidentiality of the data, the storage of information content, the access and the maintenance of the payment systems. At the end, before awarding the Best Counter Officers, allow me to express gratitude on my behalf and on behalf of the National Bank for their daily and painstaking work in the banks’ branches. Thank you for your attention and congratulations on the World Savings Day! 2/2  BIS central bankers' speeches
Sometimes we hear it said that the ECB should have a less accommodative monetary policy because it has created false incentives for governments. This reasoning is not in line with the spirit and the letter of the European Treaties. The ECB is not – and must not be – an instrument of fiscal policy. But we say to the countries in question that they should make the most of the current situation and of the gains stemming from the drop in interest rates to reduce their indebtedness rather than to spend more. Finally, do you think that the ECB will exit this state of emergency before you come to the end of your term? As far as the financial state of emergency is concerned, yes I do. The challenge now is to achieve long-term growth. So, the answer is no? Let’s just say that, increasingly, the challenges that Europe is facing are unrelated to monetary policy. BIS central bankers’ speeches  3  Let’s move on to the topic of Greece. Social discontent is on the rise, the negotiations between the Tsipras government and the “quartet” are already stalling over some points of the new financial rescue plan. Isn’t there a risk that the coming months will be turbulent? No one said it would be easy. The third programme, which was approved by the Greek Parliament, is extremely ambitious. It covers areas that previous governments had not dared to tackle, which call into question existing benefits, for example the battle against vested interests in some sectors.

If the Fed were to raise its rates, it would be a sign that growth and employment indicators are robust in the United States. This, essentially, would be good news for Europe. Despite all of the ECB’s efforts to inject liquidity, large companies in the euro area are sitting on mountains of cash and not investing… Monetary policy is supporting the recovery in demand and has removed a key obstacle to investment – financing. But obstacles remain on the supply side. Weak investment, even though financing costs are low, shows that there is a dearth of projects that are sufficiently profitable in the long term. This reveals a lack of productivity and innovation. The ECB cannot do much about that. On top of this, there are external risks: slowing global growth, particularly in large emerging economies. In other words, it’s pointless to expect that an eventual increase in quantitative easing will be enough to stimulate investment… Quantitative easing, by pushing back the horizon for monetary policy action, removed the financing obstacle. Lending rates to enterprises have fallen significantly, including in the stressed euro area countries. What we can do, what we must do, is maintain confidence in inflation returning towards our objective of 2%. The ECB, within its mandate, cannot accept inflation stabilising in the vicinity of 1%. You regularly underline the risks of inflation and growth being too low. But there are always risks – the sky could fall in!