samchain/econo-pairs-v1 huggingface dataset:
BIS Review 126/2010  9  Table 2 Economic growth and inflation (annual change, percent) 2010 (f)  2011 (f)  GDP Domestic demand Domestic demand (w/o inventory change) Gross fixed capital formation Total consumption Goods and services exports Goods and services imports Current account (% of GDP)  2008 3,7 7,6 7,5 18,6 4,0 3,1 12,2 -1,5  2009 -1,5 -5,9 -2,8 -15,3 1,8 -5,6 -14,3 2,6  5.0-5.5 16,1 11,3 21,2 8,3 -0,3 26,3 -1,1  5.5-6.5 6,2 7,4 13,6 5,3 6,1 6,4 -2,5  Average CPI inflation December CPI inflation CPI inflation in around 2 years (*)  8,7 7,1  1,6 -1,4  1,7 3,9  3,3 3,2  Average CPIX inflation December CPIX inflation CPIX inflation in around 2 years (*)  8,4 8,6  2,8 -1,8  0,8 3,5  3,6 3,5  Average CPIX1 inflation December CPIX1 inflation CPIX1 inflation in around 2 years (*)  7,8 7,7  2,8 -1,1  -0,3 1,5  3,0 3,2  2012 (f)  3,0  3,1  3,0  (f) Forecast. (*) Inflation forecast to the third quarter of 2012. Source: Central Bank of Chile.

Source: Central Bank of Chile. Figure 10 Incidences on annual CPI inflation (1)(2) (percentage points)  CPI inflation (1) (annual change, percent) 10  10  10  10  8  8  8  8  6  6  6  6  4  4  4  4  2  2  2  2  0  0  0  0  -2  -2  -4  -4  -2  -2  06  08  10  12  IPoM jun. 2010  IPoM sep. 2010  -4  03 04 05 06 07 08 09  4  4  -4  Public utilities (5,43%) Fuels (5.7%) Foodstuffs w/o fresh fruits and vegetables (21.32%) Fresh fruits and vegetables (2.90%) Other (64,65%)  (1) Gray area shows forecasts as from the third quarter of 2010. (2) In parentheses, shares in the CPI basket with annual base 2009. For the period 2003-2008, weights in the basket of December 1998. For 2009, weights in the basket of December 2008. Sources: Central Bank of Chile and National Statistics Institute.
One thing I would like to close on is to talk a bit more broadly about issues related to Thailand beyond the financial sector. Firstly, I would like to start by saying thank you. Thank you in the sense that policymakers in Thailand recognize that we are where we are today, largely thanks to our friends from Japan. Our success in building an export-driven economy is owing to the large inflow of Japanese foreign direct investment that came to us after the Plaza Accord. Over the years, such investment has contributed significantly and substantially to the improved living standards in Thailand today, and again, thank you for that. I think our partnership is something that we both benefited from as Thailand benefits from the partnership with Japan, and Japanese firms have also benefited from being here in Thailand. We recognize that things are different now, and the reasons that brought you here to Thailand back then are probably not the same reasons that will bring in new investment today. Therefore, we need to look a bit beyond and think about a new investment thesis for Thailand. Back then, we were a rapidly growing economy in the years before the Asian financial crisis, growing at a rate close to 10 percent a year. People were talking about Thailand becoming a newly industrialized economy at that time. That story is very different now, but I do think Thailand is still a good place to do business.

The other thing that would be a requirement for a highly connected economy is good logistics. According to the World Bank’s International Logistics Performance Index, the country in ASEAN with the best logistics is Singapore, but Thailand is number two. It is another indication that if you buy the argument that ASEAN is a good place to be, and you look for a very well-connected place in ASEAN, then Thailand is probably not a bad place for you to be. I might be sharing my thoughts a bit beyond the responsibility of the Bank of Thailand to convey appreciation for the good partnership that we have had with Japan through the years and hope that partnership will continue. Going forward, I would like to emphasize that we cannot rely on the same old investment or growth story that we had before when we were younger and were growing very strongly. We are a different kind of economy today, but there are still sound reasons for our friends from Japan to continue operating and investing in Thailand. With that, let me conclude the formal part of the talk and turn it over to any questions you may have. Thank you. Page 8 of 8
And business investment has expanded at the fastest rate for almost a decade. These upside demand “shocks” have not – at least so far – been offset by a slowing in consumer spending. Given past relationships, we might expect some upward pressure on inflation. But we should be cautious. Like the US in the late 1990s, we have experienced our own positive “supply shock” in the form of a significant wave of inward migration, especially from the accession states, of people looking for work. That has reduced the risk of a rising demand for labour leading to faster wage inflation. But despite greater availability of labour, businesses have not over the past year expanded employment sufficiently to prevent stronger demand from increasing capacity pressures. The Bank’s Agents report that capacity utilisation is now at an unusually high level. These pressures encourage businesses to raise prices. And that is exactly what the business surveys suggest has been happening. A position in which growth is above its long-run average and businesses are already operating with pressures on capacity is unlikely to be one without inflationary risks. That is one reason why the Monetary Policy Committee has raised interest rates over the past year. The second question is about money and credit. The quantities of broad money and bank lending are now around 14% higher than a year ago – rates of growth last seen in 1990 when inflation was more than 8%. But again, we should be cautious.

But, because it takes some time before changes in Bank Rate affect inflation, it is important that the Monetary Policy Committee look through this short-run volatility and try to understand where inflation might be heading in the medium term. That poses a real challenge. None of us can foresee the future. To assess the likelihood of different possible outcomes for inflation, we examine all the available information – official statistics, business surveys, and reports from around the country, including those from our team in Wales. Then we make a judgement about the outlook for inflation. That judgement cannot be made on the basis that just because certain developments seem to have forecast inflation in the past they will do so again. Such correlations are not stable over time. We have to try to discover the driving forces behind the mosaic comprising all the different pieces of information that we examine each month. To understand what is likely to happen in the economy, we have to behave like the child who cannot stop asking “why?” Why is output growing so steadily? Why did recorded employment fall last quarter? Why are money and credit rising so rapidly? Why have oil prices picked up? And each answer inevitably provokes another question “why?” So setting interest rates is not straightforward. Our job, in fact, is rather like taking part in a “spot the ball” competition.
This means that, in addition to clarifying our own thoughts, we are up to a point in the business of persuasion. Ours is not a system of postal voting. It is a system of listening to and learning from each other. Second, with qualifications, some of the MPC’s communications are relatively more collective. In particular, our communications on a broadly shared ‘model’ of how the economy works, and our forecasts of the outlook for growth and inflation. In 1998, the (then) Committee published a paper on the Monetary Transmission Mechanism; and, in a 2007 paper to the Treasury Select Committee of Parliament, we described our view of material changes in the workings of the economy during the Committee’s first ten years. Both were agreed, collegiate-like documents, while not committing every member to every proposition. Much the same can be said of our quarterly forecasts and Inflation Reports, which play a central role in the MPC’s system. Our forecasts are the projections of the policymakers not the supporting analytical staff. It is striking that the ‘individualistic’ MPC publishes a common forecast, whereas the somewhat more-collegial FOMC has long published information (the central tendency and range) about the forecasts of its individual members (without the names). The FOMC’s approach allows the range of central projections to be transparent. It is  3  See Tucker, P M W, ‘Reflections on operating inflation targeting’, speech at the Graduate School of Business, University of Chicago, July 2006, Bank of England Quarterly Bulletin Q2 2006, pp 212-224.

Kate Barker, ‘Monetary Policy in the UK – The Framework and current issues’ delivered at the National Association of Business Economics Policy Conference, Washington DC, March 2005, Bank of England Quarterly Bulletin Q2 2005, pp 276-282. Rachel Lomax ‘The MPC comes of age’, a speech delivered at De Montford University, February 2007, Bank of England Quarterly Bulletin Q1 2007, pp 106-111. Charlie Bean ‘Inflation Targeting: the UK experience’, speech at the Annual Congress of the German Economic Association, October 2003, Bank of England Quarterly Bulletin Q4 2003, pp 479-494. BIS Review 96/2008  3  quite different in kind from the fan charts we publish in the UK, showing the band of uncertainty around central projections for output growth and inflation. Our ‘fans’ are not, as is sometimes suggested, a way of encompassing the central view of each of the nine individual members; they reflect collective discussion and agreement. Mutual engagement would not be needed if we were in the business of publishing nine individual fan charts. Frequently, we do indicate in the Inflation Report that different members assign different weights to the various risks around the central projection. And to be clear, individual members are not constrained to be part of the collective forecast; if our differences were sufficiently material, we could make that clear quantitatively in the Inflation Report. But, if at any point, all nine members did so, the centrifugal elements of our individualistic system could, it seems to me, lead to genuine cacophony.
In February 1929, Josiah Stamp went to Paris as a member of the Young Committee to assess whether the reparations debts run up by Germany could be repaid – the similarities with the present situation in Europe are too poignant to dwell on. In a letter to Keynes, Stamp compared these international meetings to a conjuror trying to pull a rabbit out of the hat: “It is still a madhouse, in a way – but all are mad in a very genteel way, the main occupation being elaborate proofs, from different angles, of sanity. One half sit round a hat saying with Coué reiteration: there is a rabbit – there is. The other half try to make a noise like a succulent lettuce. There is a general conviction that the more eminent the conjurors convened, the more certainty is there of the existence of the rabbit”. 33 The only escape from madness is the power of ideas. Today, we understand less than we would wish about how the economy works. The challenge of trying to understand more, and of developing those new ideas, belongs to you – the next generation of students and academics at the LSE and elsewhere. Go to it! 33  Stamp’s letter is reprinted in the collected works of J.M.Keynes volume XVIII, p.306-7, Macmillan 1978. Émile Coué was a French psychologist who developed a popular method of psychotherapy based on optimistic autosuggestion. He would have been right at home in modern economic policy debates.

Also, in addition to the ABSs that were already eligible for Eurosystem operations, the ECB would accept as eligible collateral ABSs with a second best rating at issuance and over the lifetime of A- or above, the underlying assets of which comprise residential mortgages and loans to SMEs. Additional credit claims not complying with the regular minimum credit quality threshold applied to collateral eligible for Eurosystem credit operations are subject to increased haircuts to aim at achieving risk equivalence with the regular set of eligible collateral. The Eurosystem allotted € billion with the first three-year LTRO on 21 December 2011. Accounting for other operations that matured and settled within that week, however, the net liquidity increase was € billion. In the second three-year LTRO, on 29 February, the Eurosystem provided credit institutions with an additional gross amount of € billion. Again, taking into account maturing operations, the net liquidity injection was around € billion. Counterparties bidding in the three-year LTROs can be divided into two groups: one group consists of many small banks, bidding for comparatively small amounts, while the other group comprises large banks and accounts for the main share of the overall allotment amount. A distinctive feature of the second operation was the higher number of bidders, 800, as opposed to 523 in the first operation. The majority of bidders in the second LTRO were small banks from euro area countries where the economic conditions are stronger, with more than half of the bidders bidding for € million or less.
But the data and conditions have not progressed enough for the FOMC to shift its monetary policy stance of strong support for the economic recovery. Specifically, the FOMC decided last week to maintain the target range for the federal funds rate at zero to ¼ percent and made no changes to its program of asset purchases. In thinking about adjusting its stance in the future, the FOMC has defined conditions and measures that will inform its decision-making. In terms of the federal funds rate, the FOMC said it expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the FOMC’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. The FOMC also said it will maintain its current asset purchase pace until substantial further progress has been made toward its employment and inflation goals.5  Conclusion I hope you remember the “things we said today,” but if not, here’s my final message. The sun is shining, both literally and figuratively. Progress on vaccinations and the economy is very welcome news, and I look forward to a full and complete recovery, accompanied by inflation that averages 2 percent over time. Thank you, and I look forward to your questions.

Finally, may I represent the Treasury Markets Forum to thank the Chinese University of Hong Kong and the University of Science and Technology in developing the certificate programmes on dealing, settlement and fixed income securities. I would also like to congratulate ACI - The Financial Markets Association of Hong Kong in successfully introducing the new membership regime and expanding the membership. Thank you. 2  BIS Review 58/2004
Underscoring this more positive sentiment, the data on new orders and shipments of machinery and other capital goods have been increasing at a good clip and surveys of business purchasing managers point to growth in both the manufacturing and nonmanufacturing sectors. However, there are still some sectors – such as single-family housing markets – that continue to struggle. Starts of new single family houses are only about half of the way back to where they were even before the housing boom. In part, the weakness here reflects continued fallout from the financial crisis, as it is still the case that mortgage credit is hard to come by for those without the most pristine credit ratings. So what does this economic outlook mean for the achievement of the Fed’s dual mandate objectives? Underutilization in the labor market Let’s consider labor markets first. Output growth is key for producing healthier labor market conditions. Although the economic recovery generally has been weak, there has been enough cumulative progress to generate considerable improvement in the labor market. So where do we stand today? How much further do we have to go to fulfill our employment mandate? We can point to several measures to mark the progress we have made to date. Employment has been growing over 200,000 per month for quite some time. With expanding employment, the unemployment rate has fallen relatively rapidly.

For me, the biggest and costliest downside risk is that in our haste to get back to “business as usual” monetary policy, we could stall progress and backtrack to the economic circumstances of recent years – an economy mired in the ZLB. To say the least, conducting monetary policy at the ZLB has been a difficult experience that we all want to avoid repeating unnecessarily. In the winter of 2009, with the unemployment rate soaring to double digits, the Fed would have very much liked to lower the nominal federal funds rate an additional 300 basis points; but we couldn’t because the rate was already at zero. Faced with a pressing need to provide additional accommodation, we were forced to turn to innovative, but controversial, unconventional monetary policies. These policies have been extremely helpful. But there is no denying that they were second-best options; the ZLB had made lowering the fed funds rate, which is our first-best interest rate tool, infeasible. Everyone will welcome a return to more normal times and a reliance on the traditional policy framework of adjustments to the federal funds rate. But the decision about when to begin to raise rates shouldn’t be made prematurely. Rather, the decision for policy liftoff has to be made for the right reasons – that is, it should be dictated by economic conditions. Like my colleague Minneapolis Fed President Narayana Kocherlakota. 2 I think that policy at all times must be goal-oriented. Our experiences since the crisis began and current economic conditions are highly unusual.
Continued implementation of prudent monetary and fiscal policies, fairly favourable developments in the exchange rate coupled with pro-growth and pro-poor agricultural policies that have led to an increase in food supply and subsequent improvement in the country’s food security largely explain the favourable developments in inflation. For instance, the country recorded an increase in maize surplus to 250,000 metric tons (mt) this consumption period from 160,000 mt during the 2006/2007 consumption period. With respect to the money market, given lower inflation and yield rates on Government securities, commercial banks lending rates have been on the downward path. This can be illustrated by the nominal average lending rates which declined to around 28% in December 2006 from about 34% in December 2005, and further fell to 24.3% in September 2007. This is consistent with Government’s desire of making more funds available for priority sectors of our economy at reasonable cost, in line with the objectives the Fifth National Development Plan, 2006-2010. Ladies and gentlemen, testimony to this was the recent lowering of the statutory reserve ratio by the Bank of Zambia to 8% from 14% effective 1st October 2007. We expect this action, will release more funds to the commercial banks for on-ward lending to the priority sectors. Availability of investible funds to sectors such as agriculture, manufacturing, tourism and mining will stimulate further growth in the economy, create more employment and incomes, and contribute to alleviation of poverty.

BIS Review 126/1999  6  These have not been easy times for banks. As a regulator, I cannot help but underscore the essential role banks play in the global marketplace. By intermediating credit between savers and investors and providing liquidity to the financial sector, banks are the essential link in well-functioning economies. Thus, while capital levels and risk management policies are without question important, they do not take precedence over the responsibilities of bankers to serve their purpose in a Schumpeterian world of creative destruction. This most fundamental of responsibilities involves the use of credit judgment. By this I mean that bankers must not lend to excess when times seem good and then lend too little when times appear more difficult. This is an ongoing obligation of banks and is no less so as we approach the century date change. With roughly six weeks to go before year-end, I believe it critical that banks approach the new year with these thoughts in mind and I call on them to be attentive to providing for their customers’ reasonable needs. By reasonable needs, I have in mind that banks should think twice about huge demands based on what seems to be customers’ excessive concern about Y2K, but grant appropriate credit for realistic needs, even if this involves somewhat greater use of their own balance sheets than would usually be the case.
It suggests a sharp bifurcation in demographic trends in developed and emerging economies. Among advanced countries, an ageing population results in a decline in the middle-aged share, from a peak today of almost 30% to around 25% by 2050. For developing economies the reverse is true, with a continuing rise in the fraction of middle-aged individuals from 20% today to around 25% by 2050. Cross-country correlations suggest a relationship between this prime-saving cohort and saving behaviour. Chart 22 suggest that every 1 percentage point rise in the middle-aged population share raises the national savings rate by around 1.75 percentage points. 5 Taken together with emerging population trends, this suggests some potentially important life-cycle pressures on the global pattern of savings in the period ahead. To bring these pressures to life, Chart 23 projects saving rates in a selection of countries out to 2050 based on population and GDP projections. This is plainly a gross over-simplification. These projections take no account of a whole host of other factors that may push in the other direction, including later retirement dates which may boost saving in countries with an ageing population, and falls in saving rates in emerging countries as the social safety net is widened. But based on demographic and convergence trends alone, saving rates in the BRICS, already high, are projected to continue their ascent.

It is unsurprising, then, that savings behaviour lies at the heart of the current debate among policymakers and academics on the causes of imbalances. This, too, need not be bad news. For example, differential savings may simply be mirroring fundamentals, reflecting differences in rates of time preference among consumers or differential rates of technological progress among companies. Equally, it is possible to conceive of explanations for differential saving which are less well-rooted in fundamentals, such as lax monetary policy in the West or mercantilist trade policy in the East. 2 These latter explanations take us closer to a bad cholesterol story for global imbalances. This is where much of the current debate on global imbalances is centred. Are they the result of surplus countries saving excessively – a “savings glut” explanation (Bernanke (2005))? Or is it instead the deficit countries saving too little – a “savings shortage” explanation (Taylor (2007)). Put differently, is the problem impatience in the West or excessive patience in the East? 2  This can lead to a global co-ordination (or adding-up) problem, as countries seek individually to each run a current account surplus, so depressing global demand (King (2010)). BIS Review 174/2010  3  Global imbalances – present To begin to answer those questions, consider recent saving behaviour in two archetypical surplus and deficit countries – China and the US. Chart 7 looks at the respective contributions of China and the US to global savings since 1980. In 1980, the US contributed around a quarter of global saving.