samchain/econo-pairs-v1 huggingface dataset:
If a lender that cannot earn the IOER rate has an unexpectedly large amount of funds to invest, this lender currently may have to accept an unusually low interest rate. But with the overnight reverse repo facility in place, this lender could lend as much funds as desired to the facility at a fixed rate and this should reduce the downward pressure on money market rates. By tightening control and reducing the volatility of short-term rates, such a facility should reassure investors that the Federal Reserve has sufficient tools to manage monetary policy effectively even with a very large balance sheet. I have told you what this facility is for. Now let me emphasize what the testing and development of this facility does not foreshadow. The testing and the development of the facility is not being undertaken to facilitate or expedite exit from our large balance sheet and should not be considered to be an element of the exit process. The purpose of the facility is to establish a floor on money market rates and to improve the implementation of monetary policy even when the balance sheet is large. Even if our balance sheet increases significantly further and stays very large for many years, it will be useful to have this facility available to improve monetary policy control. In coming months we will test the facility with two goals in mind.

The contribution of labour is negligible, bringing to the fore the question on declining labour participation in the region, underpinned by the demographics and the intensive emigration of young and skilled workers. But, the marked slowdown in TFP, which is an indicator on how efficiently production factors are used, is worrisome. There are many forces that can influence total factor productivity and they are all endogenously interlinked. The competiveness of the economy, the quality of human capital, quality of institutions, innovation and technological readiness are just some of them. Unfortunately, the region is not well positioned along those dimensions. The average ranks for quality of institutions and human capital, according to the global competitiveness index, stand at 63 and 53 out of 141 countries, which is still distant compared to more advanced countries. The recently published EBRD digitalisation index, on average for the region, is gravitating around 70, with a wide gap to be closed compared to the frontier of 100. Is there any role for central banks in supporting the structural agenda? Although this is obviously beyond the central banks' remit, still they can provide a support in some segments such as digitalization, which can unleash productivity revival or tackle climate risks - an issue that is becoming intensively proliferated among central banks. It is neither a coincidence nor an attempt for central banks to be more impressive and fancy. Climate risks can severely affect the capacity to grow, the prices dynamics, financial stability as well.
Today, though, we are focusing on a second impediment to the impact of monetary policy on the economy through housing and mortgage finance: the significant widening of the spread between yields on mortgage-backed securities in the secondary market and primary mortgage rates. Actions taken by the FOMC such as its MBS purchase program operate principally on the secondary rate. For these actions to achieve their full impact, reductions in the secondary rate need to also pass through to the primary rate. To the extent that the primary-secondary rate spread widens the reduction in pass-through limits the full impact of the policy actions. In the late 1990s and early 2000s the primary-secondary spread was in the range of 30 to 50 basis points. In recent years and over the past 18 months in particular, the spread has increased substantially. Following the September FOMC meeting it rose above 150 basis points. A spike in the spread following a decision to ease monetary policy is not surprising because the primary market may be slower to react. The spread has since retraced to its pre-September FOMC meeting level of about 120 basis points. However, the spread remains elevated by historic standards. An important objective of this workshop is to gain a deeper and clearer understanding of the determinants of the primary-secondary spread and its dynamics over time.

And hence the commitment I reaffirm today to bring inflation back towards 2% by 2025, is consistent with the full transmission of the monetary tightening at work until summer 2023. b. Against this backdrop of significant transmission "in the pipe" and still to come in real economy, a deceleration in the size of the policy steps (from 50bp to 25 bp) was wise and cautious. We obviously keep our hands free, but we add the capacity of observing and monitoring the pass-through of our massive past hikes. Persistence is now more important than speed; the duration for which we will maintain rates is now more important than the precise terminal level we will reach. Or in other words, for interest rates as with ballistics, "longer" is becoming more significant than "higher". c. Hence, our next rate decisions should not focus such attention; we already have completed most of our rate-hiking journey, and we are clearly in restrictive territory. That said, as I said already last January, I expect today that we will be at the terminal rate not later than by summer, which starts in June and ends in September. Hence we have three possible Governing Councils either to hike or to pause; but don't deduce a guidance from this or a preference for a given terminal rate. We will remain data driven, looking meeting by meeting at the outlook for headline as well as for underlying inflation. Monetary policy is at work and rest assured, we'll do the job: we'll bring inflation back towards 2%.
1  For an overview of what inflation-targeting central banks say about stabilising output, see Kuttner, K.N. (2004), “A Snapshot of Inflation Targeting in its Adolescence” in Kent, C. and S. Guttman, The Future of Inflation Targeting, Conference Volume, Reserve Bank of Australia. 2  BIS Review 45/2005  To some extent, the problems we have experienced probably reflect the fact that most people always prefer lower interest rates to higher ones. But it could also be the case, of course, that the way in which we have dealt with and communicated the flexibility problem has simply not been clear enough, despite our best efforts. One could perhaps see it as a sign that we have been too successful in “anchoring” the simple rule that we introduced at an early stage in an attempt to clearly explain our decisions and to create confidence in the new regime. Discrepancy between word and deed Of course, Sweden is not the only country in which the communication of flexible inflation targeting has caused problems. For instance, at the international level there is more general criticism claiming that the central banks in inflation-targeting countries are biased in their monetary policy communication towards stabilising inflation.2 The criticism is hence not levelled at how inflation targeting is conducted in practice; it recognises that the central banks in inflation-targeting countries do take account of the real economy.

Another benefit of a clear framework, which I think has received too little attention in academic circles, but which in my opinion has been important for the favourable outcome, is that it helps bolster both the internal work and the economic discussion. Other considerations than those purely related to inflation have most likely been put to a more rigorous intellectual test than would otherwise have been the case, which I think has been useful. However, the fact that inflation targeting has worked well does not mean, of course, that all problems have been solved and that there are no more issues worth discussing; if that were so, there would have been no reason to arrange this conference. By way of introduction, I intend to describe some Swedish experiences of a problem area in inflation targeting that I see as one of the more significant, perhaps even the most significant - how to deal with the trade-off between stabilising inflation and stabilising the real economy. I will focus in this regard on two of the areas central to this conference how policy is implemented and communicated. The inflation-real economy trade-off Flexible inflation targeting policy It is presumably safe to say that all inflation-targeting countries today conduct what Lars Svensson would call a flexible rather than a strict inflation targeting policy, even though the degree of flexibility  BIS Review 45/2005  1  probably varies somewhat from country to country. In other words, they are not, to use Mervyn King’s well-known expression, “inflation nutters”, i.e.
26 Analysis of the data and extensive market intelligence suggested that the slight increase in money market rates within the target range during the spring months was primarily due to an increase in the supply of Treasury securities and an associated rise in Treasury bill yields and repo rates. In particular, in the first few months of the year, U.S. Treasury bill supply increased by over $ billion, which contributed to a rise in dealer inventories likely financed in the repo market. The resulting increase in bill rates and associated short-term repo rates created an attractive alternative investment opportunity for federal funds lenders, notably the FHLBs, which make up about 95 percent of current overnight lending in the federal funds market. As federal funds borrowers competed for a reduced pool of funds, rates rose. In addition, the gradual decline in reserve balances due to balance sheet normalization, together with changing dynamics within money markets—in part due to the regulatory environment, which may have recently prompted some banks to pay up for federal funds to improve their LCRs—may have helped push rates up a bit over time. For a thorough discussion of this dynamic, see Potter, “Confidence in the Implementation of U.S. Monetary Policy Normalization,” August 4, 2018. 27 While the further move up in the EFFR relative to the IOR rate is not surprising, the pace has been quicker than many market participants expected.

6  anticipates reducing the quantity of reserve balances to a level “appreciably below that seen in recent years but larger than before the financial crisis.” While the FOMC has articulated how the balance sheet will be reduced, there remains uncertainty about the long-run size and composition of the Federal Reserve’s balance sheet. Importantly, the size and composition will depend on growth in the various non-reserve liabilities, demand for reserve balances, and the future monetary policy implementation framework. The FOMC has not made any decisions about the long-run monetary policy implementation framework; however, the minutes from the July/August FOMC meeting suggest that the Committee will likely resume a discussion of operating frameworks in the near future. 17 It is also not known how non-reserve and reserve liabilities will evolve going forward; however, our regular surveys give us a sense of how some market participants are viewing many of these components, which we show in Figure 7. In particular, the surveys ask respondents about their expectations for the size and composition of the Federal Reserve’s balance sheet, on average, in 2025, under the assumption of no return to the zero lower bound. The responses serve as a good proxy for expectations about the long-run size of the balance sheet. The median expectations are for the balance sheet to be $ trillion on average in 2025 and for reserve balances to be $ billion, or about $ trillion below their current level.
The main role in creating the inflation rate during 2004 has been played by the “Rent, water, fuels, energy” group, unlike the past years when this role was played by the “Foodstuffs and non-alcoholics” group. The price index of the “Rent, water, fuels and energy” group marked high annual growth rates over 2004. Despite the increase of the energy price by 31.2 percent in February of this year, this group recorded a rise even in the price of rent and imputed rent. The annual inflation rate of the “Foodstuffs and non-alcoholics” group has been a negative one during May-November, due to the growth of domestic agricultural production, including the production of greenhouses. The positive inflation performance during the last two years was facilitated by the absence of shocks, the positive developments of productive capacities and the consolidation of macroeconomic and macrofinancial indicators. The concern that oil price rise in the international markets would have caused a consumer price rise even in Albania, has not become a reality. The appreciation of exchange rate in Lek against US dollar during 2004 has eased the effect of oil price rise in the international markets. Also, the inflation value of the two main partner countries, Italy and Greece, has been low, compared to inflation rates in Albania. As a consequence, imported inflationary pressures did not accompany Albania’s trade activity. The favourable macroeconomic developments during 2004 have provided an appropriate environment for the inflation control.

During 2004 the banking system assets were raised by Lek 52.8 billion (or 14.1 percent), about Lek 18.5 billion more than the growth of assets evidenced over 2003. Year 2004 underwent a significant rise in lending activity, with a growth rate of 38 percent (or Lek 19.3 billion) at end of 2004, compared to 30.5 percent at end of 2003. Therefore, lending rose to 16.4 percent of total assets of the system at end of 2004, from 13.5 percent in the same period of 2003. Lending quality indicator (problem loans to credit balance ratio) is estimated at 4.2 percent, from 4.6 percent at end of 2003. The lowest level of this indicator highlights improvement in lending quality and limited banking system exposure to credit risk. Downward trend of capital adequacy ratio during 2004 was due to a better exploitation of banks’ capacities in terms of extending in riskier investments. During 2004 the supervision process, trying to be proactive and continuous, had on its focus the risk assessment of banks’ activity. Following up the requirements of Supervision Development Plan, the document on “Operative Supervision Policy” was drafted and approved, prescribing banks’ supervision principles. In view of this policy, the supervision cycle for banks that present less concern to supervision is lengthened from 12 months to 18 months, whereas for problematic banks it is reduced to 6 months.
Even over the next few years, while there are significant downside risks relating to the fiscal cliff and the eurozone, it is possible that the recovery could turn out stronger than expected. The underlying process of balance sheet repair is considerably advanced, housing is recovering and, as that occurs, our newly recalibrated monetary policy could gain additional traction. Thus, if uncertainties about the U.S. fiscal path and the future of the eurozone were resolved in a constructive manner, growth could pick up more vigorously than anticipated. 5  8  http://www.people-press.org/2011/11/03/section-6-generations-and-entitlements/  BIS central bankers’ speeches  This would be a wonderful outcome. The September FOMC statement noted: the Committee expects “that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the recovery strengthens”. Consistent with this, if we were to see some good news on growth I would not expect us to respond in a hasty manner. Only as we became confident that the recovery was securely established, would I expect our monetary policy stance to evolve to ensure that it remained appropriate to achievement of our objective: maximum sustainable employment in the context of price stability. Thank you for your kind attention. I would welcome a few questions.

BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  References Ahearne, Alan, Joseph Gagnon, Jane Haltmaier, and Steve Kamin [and Christopher Erceg, Jon Faust, Luca Guerrieri, Carter Hemphill, Linda Kole, Jennifer Roush, John Rogers, Nathan Sheets, and Jonathan Wright] (2002). “Preventing Deflation: Lessons from Japan’s Experience in the 1990s”. Board of Governors of the Federal Reserve System, International Finance Discussion Paper Number 729, June. Dudley, William C. (2012). “Conducting Monetary Policy: Rules, Learning and Risk Management”. Remarks at the C. Peter McColough Series on International Economics, Council on Foreign Relations, New York City, May 24. Gagnon, Joseph; Matthew Raskin, Julie Remache, and Brian Sack (2010). “Large-Scale Asset Purchases by the Federal Reserve: Did They Work?” Federal Reserve Bank of New York Staff Report Number 441, March. Krishnamurthy, Arvind, and Annette Vissing-Jorgensen (2011). “The Effects of Quantitative Easing on Interest Rates: Channels and Implications for Policy”. Brookings Papers on Economic Activity, 2011:2, pp. 215–65. Kuttner, Kenneth N., and Adam S. Posen (2001). “The Great Recession: Lessons for Macroeconomic Policy from Japan”. Brookings Papers on Economic Activity, 2001:2, pp. 93–185. Reinhart, Carmen M., and Kenneth S. Rogoff (2009). “This Time is Different: Eight Centuries of Financial Folly”. Princeton, NJ: Princeton University Press. Åžahin, AyÅŸegül; Joseph Song; Giorgio Topa; and Giovanni L. Violante (2012). “Mismatch Unemployment”. Federal Reserve Bank of New York Staff Report Number 566, August. Woodford, Michael (2012). “Methods of Policy Accommodation at the Interest-Rate Lower Bound”.
I would like to emphasise that undertaking such projects emphasises the mutual engagement of the EU and Albania with regard to deepening integration processes of our country, and reiterates Albania’s European perspective. Dear ladies and gentlemen, In the last decade, Bank of Albania has implemented a number of EU-funded projects. The first twinning project was implemented during 2012 – 2013. At that time, like now, Banca d’Italia – in partnership with Banque de France – contributed successfully to achieving concrete results in six areas of Bank of Albania’s activity. The second project – needs analysis for Bank of Albania’s approximation, funded by the EU – was led by the European Central Bank and was implemented during 2014. The aim of the sixmonth project was to assess the legal, regulatory and operational frameworks of the Bank of Albania vis-à-vis standards and best practices applied in European central banks. From this perspective, it should be underlined that the recommendations left upon the completion of this project are incorporated in the list of main priorities for Bank of Albania’s institutional approximation to the model applied in the European System of Central Banks. In addition, in light of addressing these priorities, the European Commission decided to allocate EUR 800 000 as under IPA 2015. After a long process of consultations and sharing information, for the first time, Bank of Albania’s experts put together a Twinning Project, which was submitted to the European Union Delegation to Albania.

Gent Sejko: Enhancing Bank of Albania’s alignment with EU Acquis Address by Mr Gent Sejko, Governor of the Bank of Albania, at the launching ceremony of the Twinning Project “Enhancing Bank of Albania’s alignment with EU Acquis”, Tirana, 19 December 2019. * * * Your Excellencies Ambassadors, Representatives of Banca d’Italia and Deutsche Bundesbank, Ladies and gentlemen, Dear guests, I have the pleasure, as the Governor of the Bank of Albania, to welcome you to the launching ceremony of the Twinning Project on “Enhancing Bank of Albania’s alignment with EU Acquis”. The project is financed with IPA 2015 EU funds, following a previous project on needs analysis for the Bank of Albania – designed and led by the ECB in partnership with 11 central banks of the European System of Central Banks. From this perspective, the new twinning project we are launching today may be considered a continuation of the previous one, given that it will address a significant number of recommendations from 2014. Hoping that in the spring of 2020 we will see a green light for the opening of accession negotiations for Albania, I would like to reassure you of Bank of Albania’s commitment to fulfilling priorities arising from the European integration process. Major objectives for strengthening the long-term capacities of the institution coincide with the approximation of its legal, regulatory and operational frameworks to that of the European System of Central Banks.
The persistence of uncertainties in particular relating to geopolitical factors and the threat of protectionism is weighing on economic sentiment. 1/4  BIS central bankers' speeches  At the same time, supportive financing conditions, favourable labour market dynamics and rising wage growth continue to underpin the euro area expansion and gradually rising inflation pressures. This supports our confidence in the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term. Significant monetary policy stimulus remains essential to support the further build-up of domestic price pressures and headline inflation developments over the medium term. This will be provided by our forward guidance on the key ECB interest rates, reinforced by the reinvestments of the sizeable stock of acquired assets. In any event, the Governing Council stands ready to adjust all of its instruments, as appropriate, to ensure that inflation continues to move towards the Governing Council’s inflation aim in a sustained manner. The euro’s external dimension The benefits of the euro have not been limited to the European internal dimension. Standing together within the Economic and Monetary Union (EMU) allowed us to retain sovereignty that would otherwise be lost by individual countries in a highly integrated world economy. As already envisaged at the time of its creation, the euro symbolises the unity of a European continent that is better able to exert global influence.

We should thus rekindle trust in our economic and fiscal framework, by making it more effective in ensuring sound policy making at national level. These actions can also be further supported at the European level by the recent decisions to launch an instrument for convergence and competitiveness for the euro area. To tackle future cyclical crises, the two layers of protection against shocks – the diversification of risk through the private financial system on the one hand, and public countercyclical support through fiscal instruments at the national and European levels on the other – need to interact in a complete and efficient manner. Achieving these reforms is not idealistic, nor utopian if we work together. And at the Euro Summit in December, leaders renewed their political commitment to strengthen EMU. If we want to realise in full the benefits of the euro, we need to capitalise on this commitment and translate it into concrete policy actions. Conclusion Mr Chairman, Honourable members of the Economic and Monetary Affairs Committee, 3/4  BIS central bankers' speeches  I have used the word “together” several times today. As this is the last time that we will be together in this legislative term, let me add a few words to you personally. I would like to thank you all for the role that this Committee has played over the past years. In my first hearing here, I remember saying that was my first exercise in democratic accountability with the European Parliament and how grateful I was for it.