samchain/econo-pairs-v1 huggingface dataset:
Over this period, unemployment fell by 1.358 million in the euro area (1.682 million in the EU). In addition, the job vacancy rate was 3.2% in the euro area in the second quarter of 2022, up from 2.3% in the same quarter of 2021. All these figures show that the labour market in Europe remains strong despite all of the difficulties I referred to earlier. Despite this dynamic labour market, wage growth has remained slow over recent months and is still moderate when compared with current inflation rates. In particular, negotiated wage growth increased to 3.1% in July 2022, up from 2.4% in the previous quarter. It is crucial that, going forward, both wage demands and business margins remain moderate to avoid the emergence of significant second round effects, which would only make inflationary pressures more persistent. Whether or not the labour market will remain strong in the future will depend on a host of unpredictable factors. In this context of rising inflation, the ECB Governing Council embarked on a process of progressive monetary policy normalisation at the end of 2021, with the withdrawal of the extraordinary monetary stimulus set in place at the onset of the pandemic. In particular, it was announced that the net asset purchases under the Pandemic Emergency Purchase Program (PEPP) would be discontinued in March 2022. In March, the ECB Governing Council agreed on a gradual reduction to the net purchases under the “regular” asset purchase program (APP).

This is more than double the figure recorded at the beginning of the year (2.3% in January). In this case, certain pandemic-related factors may have facilitated a faster than expected pass-through of inflationary pressures. First, the bottlenecks I referred to earlier, which since 2021 have constrained the supply response to growth in demand. But also the strong demand for home renovation or, more recently, the rapid pace of resumption of activities involving more social contact, after two years of demand constraints.4 Moreover, the labour market has so far performed relatively robustly in Europe, an issue I will come back to later. In this context, and in view of the escalation of the energy conflict with Russia, we expect the inflationary episode in the euro area to be more intense and longer-lasting than we initially thought before the summer. This is reflected in the latest ECB staff forecasts, which, 2  https://ec.europa.eu/eurostat/documents/2995521/14698140/2-30092022-AP-EN.pdf/727d4958-dd57-de9f-996599562e1286bf 3  These projections were published on 8 September, with a data cut-off date of 22 August. 4  Pacce, del Río and Sánchez (2022). The recent performance of underlying inflation in the euro area and in Spain. Analytical Articles, Economic Bulletin, 3/2022, Banco de España. 2  in line with the OECD or Consensus Forecasts, have recently revised their inflation outlook significantly upwards. In particular, the ECB staff projections expect average inflation to reach 8.1% in 2022, before easing to 5.5% in 2023 and 2.3% in 2024.
30  All speeches are available online at www.bankofengland.co.uk/speeches  30  Chart 11: Mark-ups for domestic and foreign-focussed UK-listed firms Mark-up (e.g. 1.2 = 20%) Mean (weighted by international sales) Mean (weighted by domestic sales)  2.0 1.9 1.8 1.7 1.6 1.5 1.4 1.3 1.2 1.1 1.0  1987  1990  1993  1996  1999  2002  2005  2008  2011  2014  2017  Sources: Thomson Reuters Worldscope and Bank calculations. Chart 12: UK-listed firms’ mark-ups and investment rates Investment rate (per cent) 30 25 20 15 Increase in mean sales-weighted UK mark-up between 1987 and 2016  10 5 0  0  1  2  3 4 5 Mark-up (e.g. 1.5 = 50%)  6  7  8  Sources: Thomson Reuters Worldscope and Bank calculations. Investment function based around the firm-level regression in Table 2. ‘Investment rate’ defined as capital expenditure as a proportion of the previous year’s net property, plant and equipment level (PPE).

Inflation expectations may be sensitive to a large but temporary shock that moved inflation outside the range within which it has remained for some years. With their belief in stability jolted, households’ inflation expectations might move by much more than was justified by the temporary nature of the shock. That would make it more difficult for the central bank to bring inflation back to target. The moral of this particular story is that it may be risky to infer from the observation that inflation expectations are stable that all is well. There will be times when large and persistent shocks occur, and it would be unwise to count on inflation expectations remaining stable when actual inflation starts to deviate substantially from its recent range. So those are the three lessons that I have learnt from Alan: (i) a recognition that economics is not a set of doctrines but a way of thinking; (ii) the importance of using qualitative and quantitative information from a range of sources; (iii) there are a small number of fundamental objectives that are crucial and which we can judge by the Greenspan yardstick of whether we have freed businesses and households from the burden of expending resources to deal with unnecessary policy volatility. Alan’s departure from the central banking scene will deprive us of a source of wisdom, inspiration and leadership. To be sure, Alan’s words, whether spoken or written, will surely still reach us from the sidelines.
Even in this century, however, there has been a conflict between fiscal and monetary policy – that is, fiscal policy has not supported monetary policy sufficiently, as it would if fiscal policy were anchored on a nominal expenditure plan several years ahead. This has proven difficult to carry out.2 It is hard to apply such a rule if exchange rate volatility causes  1  In recent years, the Central Bank has presented proposals for such reforms in two reports to the authorities. 2  An attempt to adopt such a rule was made in connection with the Government-IMF economic programme, but it appears to have been abandoned when put to the test. BIS central bankers’ speeches  1  instability in Treasury expenditures (and revenues). Furthermore, Iceland lacks a proper institutional framework – either a domestic agency (such as an independent financial council) or a foreign body – to support such policy and exercise a measure of surveillance and discipline over fiscal authorities. 3. In the third place, the source of poor performance may lie in Iceland’s economic structure, e.g. its volatile export sectors and relatively undiversified economy. The structure of the Icelandic economy is not that different from other developed countries, however. Public and private services constitute the largest sectors of the economy. Although commodity-based exports could be a source of instability, Iceland is far from being the only developed country in such a position.

Arnór Sighvatsson: Iceland’s future monetary and exchange rate regime Speech by Mr Arnór Sighvatsson, Deputy Governor of the Central Bank of Iceland, at a meeting of the Icelandic Federation of Labour, Reykjavík, 10 January 2012. *  *  *  Ladies and gentlemen: In the wake of severe financial and monetary instability, it is appropriate for the Icelandic authorities to conduct a comprehensive review of Iceland’s exchange rate and monetary policy regime. The re-assessment must be based on an accurate diagnosis. The authorities should not only review the experience of recent years, but also grapple with the fundamental questions of why Iceland’s monetary policy track record has been so dismal, over nearly a century, that the Icelandic króna has depreciated by 99.95% against the Danish krone since the two currencies were uncoupled in 1920. Monetary policy generally faces two conflicting roles of the currency exchange rate: to be an anchor of monetary policy, on the one hand, and a tool for adjustment, on the other. During the Icelandic króna’s lifetime as an independent currency, exchange rate policy has moved along the axis between fixing and floating, but without managing to stop the virtually uninterrupted erosion of the króna’s purchasing power except for short periods of time. There could be four potential types of explanations for Iceland’s poor performance in the field of monetary policy, and corresponding types of measures for improving the performance: 1. First of all, the source of the problem might be the implementation of monetary policy or its framework.
If demand continues to increase more than production, electricity prices may continue to rise more than other prices in the future. The integration of China and other low-cost countries into the world trade system has resulted in far lower prices for finished goods. These countries’ entry into the world market has also led to strong economic growth and high demand for oil and other commodities. This has pushed up both energy and commodity prices. Oil prices have risen from close to USD 30 per barrel in October 2003 to about USD 70 in May this year. The rise is largely due to increased demand for oil, and China accounts for a substantial portion of global growth in oil demand. The trend rise in energy prices and the trend fall in import prices are partly attributable to the same process. Excluding one of the effects and not the other could distort the measure of underlying inflation 2 . We have regularly published three measures of underlying inflation which are published in the Inflation Report – the CPI-ATE, the weighted median and the trimmed average (20%). Recently, we have worked with several alternative measures of underlying inflation. One of these is a volatility-weighted indicator based on historical volatility of 96 sub-indices in the CPI (Coicop4 level). The CPI weights have been replaced by weights that give the sub-indices with the widest historical fluctuations less weight, but no index has been fully excluded.

Although there will still be considerable uncertainty, it will be easier for economic agents to assess interest rate developments. This makes monetary policy more effective. The prospect of a gradual normalisation of interest rates may curb credit growth and the rise in house prices. There may be objections to our producing interest rate projections. Producing an explicit interest rate projection may be stretching our knowledge quite far. It may be argued that market participants’ overview and insight are just as good as ours and that our analyses do not add much beyond the information embedded in market rates. Another objection is the risk of the interest rate path becoming a target itself and that deviating from the interest rate projection would be perceived as a drawback, even if economic developments should so imply. It is important to stress that the interest rate path is conditional on economic developments and our understanding of the functioning of the economy. This is reflected in the fan chart bands surrounding future interest rate developments. The central bank of New Zealand has experience in producing interest rate projections, and actual interest rate developments have on many occasions differed from the projections 1 . We must also expect deviations from our projections. The interest rate will deviate from the projections if economic developments are different from the assumptions applied when the interest rate projection was published or if we change our view of how the economy functions.
In this context, I would like to underline that since the introduction of the euro in 1999, the ECB’s quantitative definition of price stability – an inflation rate of below, but close to, 2% in the euro area, over the medium term – has proved to be an invaluable asset. It has guarded against undesirably high inflation and against deflation. Long-term inflation expectations in the euro area, whether based on surveys or extracted from financial indicators, have been and continue to be firmly anchored at levels consistent with our definition of price stability. Inflation expectations have been exceptionally resistant to sudden upward short-term price changes, and we have ensured that is also the case with sharply falling inflation. Non-standard measures In addition to reducing interest rates, we have taken exceptional policy actions in response to the crisis – “non-standard” measures related to liquidity management. At the very start of the money market stress in August 2007, the ECB reacted within a few hours and temporarily provided additional liquidity to banks with immediate liquidity needs. We were in fact the first central bank to take non-standard measures. When in mid-September 2008 the crisis intensified and interbank trading came to a virtual halt, the ECB engaged in a new mode of liquidity provision. We started to provide refinancing well above the levels that banks had absorbed to fulfil their reserve requirements in normal times. Our approach comprises three main “building blocks”. •  We significantly adapted our regular refinancing operations.

We now follow a “fixed rate full allotment” tender procedure and have significantly expanded the maturity of our operations. Banks have been granted access to essentially unlimited liquidity at our policy interest rate at maturities of, initially, up to six months. This is an exceptional mode of operation. In normal times we auction a given amount of central bank credit and let competition between the bidders determine the interest rate. This unusual mode of operation implies that we currently act as a surrogate for the market in terms of both liquidity allocation and price-setting. •  Our second building block is the long list of assets that we take as collateral. This list was already very long before the crisis, but we have extended it even further and now accept an even wider range of securities as collateral. •  The first two building blocks offer unlimited refinancing against a very wide range of collateral. But they can only reach the financial system if they are coupled with the third building block, namely the very large number of counterparties that have always been able to take part in our refinancing operations. Even before the financial crisis, this number was higher than for the other major central banks. Following the changes to our operational framework in October last year, this number rose further. All these non-standard measures have now been supplemented by further exceptional steps that the ECB’s Governing Council decided to take at its last meeting on 7 May.
By law, however, exchange rate policy is a joint responsibility of the Bank and the ministry. Decisions on the exchange rate, therefore, cannot be taken, or announced, unilaterally by the Bank. ERM II is no exception. This does not, of course, preclude the Bank from expressing its independent views on aspects related to euro adoption. The Bank has indeed contributed actively to the debate by way of articles in its publications and official statements. I have also expressed the Bank's views through speeches and interviews - all of which can be accessed on the Bank's website - on what would seem an appropriate approach to take with respect to euro adoption and on the economic policy measures the country should take to make this goal realisable. These views were also conveyed very clearly in meetings with the government. Is there a deadline for the fulfilment of the relevant criteria for euro adoption? In particular, is there a deadline for entry in ERM II? The Treaty only makes it obligatory for all new Member States to participate fully in Economic and Monetary Union (EMU) at some point after EU accession. EMU is a process which foresees the eventual adoption of a single currency and of a single monetary policy and which is also characterised by fiscal discipline and economic policy coordination.

Malta, in fact, was not among the first wave of new entrants in ERM II - Estonia,  Lithuania and Slovenia joined the mechanism in June 2004 - despite expectations among many international observers that Malta would have been a candidate. Put simply, we are not rushing. It should also be clear by now that even if we wanted to rush, we would not be allowed to do so. The argument has been made in some circles that the adoption of the euro should be postponed to allow a slower pace of fiscal consolidation. My reaction to that - which is spelled out in my speech to the Institute of Financial Services in November 2004 - is that fiscal consolidation is an end in itself, regardless of whether Malta adopts the euro in the short-term or not because healthy public finances are a fundamental aspect of sound economic management. A country cannot live beyond its means indefinitely. Easing the pace of fiscal consolidation, moreover, would also make meeting the fiscal criteria at a later date even more difficult as it would result in the accumulation of debt and higher debt-service payments, requiring even greater cuts in non-interest spending or increased taxation later on. This would send negative signals abroad about the country's resolve to undertake the necessary reforms, probably leading to a downgrade by credit rating agencies and harming both Malta's image as an investment location and the exchange rate.
5  9  All speeches are available online at www.bankofengland.co.uk/news/speeches  9  Table A: Summary of the May 2019 Inflation Report forecast  4 The outlook for policy  The resilience of the economy to date has meant that the MPC and FPC have both adjusted policy. Demand, in terms of GDP growth, has exceeded growth in supply such that spare capacity in the economy has been, broadly speaking, used up. Reflecting that, and its implications for domestic inflationary pressure, the MPC has raised Bank Rate twice; it now stands at 0.75%. The FPC, meanwhile, judging that the domestic risk environment had returned to a standard level, has also raised the counter cyclical capital buffer twice to 1%. Looking ahead, if we get a smooth Brexit with a transition deal, as assumed in the MPC’s latest Inflation Report forecast (Table A), I expect growth to pick up, leading to excess demand and building domestic inflationary pressure, so that further monetary tightening is appropriate to maintain monetary stability. Relative to the best collective judgement expressed in the MPC’s central forecast I am, as I have set out in my talk today, a little more pessimistic on GDP growth than my colleagues on the MPC. But as I have discussed, that is true both on the supply side, where I can see more downside risks to productivity, and on the demand side, where I am less optimistic that investment will recover as much as it does in the central forecast.

Singapore is already an established centre for managing Asian investments of global clients, and global investments of Asian clients. The strong growth potential of wealth management makes it an industry where Singapore is well placed to become a global player. The large increase in the number of HNWIs globally has also boosted demand for estate and trust planning. We are reviewing and modernizing the Singapore Trustees Act. MAS is also reviewing the Trust Companies Act, and will take over the regulation of trust companies. These steps will enhance Singapore’s position as an international trust domicile and widen the suite of wealth management services available here. We also need to build a larger pool of wealth management skills, and continue to increase the range of product offerings for wealth management clients. Capital markets Since the Crisis, countries in Asia have recognized the importance of developing their bond markets. While individual countries have made significant progress, their markets remain fragmented and small by international standards. We need closer co-operation among the capital markets in Asia, in order to integrate the markets and collectively increase their depth and liquidity. This will allow us to effectively recycle some of Asia’s huge reserves and attract more international investors to the region. Regional governments have therefore taken several initiatives to foster a regional capital market, covering both fixed income and equity. These address both supply and demand side issues, such as easing constraints to cross border activity, forging alliances and linkages among the exchanges, as well as establishing a regional infrastructure.
In the US, the unemployment rate has fallen from its peak of 9.8% to 6.3% in May 2014 but productivity was only growing 1%, less than half of what it was in the years prior to the crisis. 2  BIS central bankers’ speeches  There are a number of possibilities as to what is going on: •  In the UK and US, it has been noted that the number of business start-ups has increased significantly in the post-crisis years. One interpretation of this is that, increasing number of people have given up on gaining employment and have decided to become self-employed. If this is true, it would help to explain the decline in unemployment and low productivity growth. Being in business means you are no longer unemployed and new businesses generally do not have very high productivity. •  Another interpretation is that a significant part of the fall in unemployment has come not so much from more people being employed but rather from people leaving the labour force. The labour force participation rate in the US has fallen from 66% prior to the crisis to its current level of 63%. Essentially, the labor force is shrinking. In which case there would be no reason to believe that the decline in unemployment should be preceded by rising productivity. Another factor undermining productivity could be the fact that the number of part-time workers has also increased – in the US, from 3% of the working population to 5% in 2014:Q1.

Benoît Cœuré: Interview with Politico Interview with Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, and Politico, conducted by Mr Pierre Briançon on 23 March 2016, and published on 30 March 2016. *  *  *  The last Governing Council meeting on 10 March seemed to be marked by some ambiguity on negative interest rates. On the one hand, the message was that rates wouldn’t get much lower. On the other, there was the signal that there could be exceptions… The question we are always trying to address is how to design our policy so that it is effective in the situation we face at a given moment. The package announced on 10 March was very potent, both in intensity and in sheer volume. Negative interest rates are not our main instrument, they just support our overall policy. And looking ahead, we’re not short of instruments – our choice is quite large. We will be able to deal with adverse situations if necessary. You indicated that the ECB wasn’t deaf to the banking sector’s concerns about the impact of negative rates on banks’ profitability. Banks’ profitability has improved when you look at the global overall impact of our monetary policy, that is, stronger credit demand and lower risk in the economy. And, as a matter of fact, the interest margin of banks has gone up, not down. Of course, the impact is different depending on banks’ business models and on how negative the rates are.