samchain/econo-pairs-v1 huggingface dataset:
By contrast with extrinsic drivers of persistence, greater intrinsic inflation persistence is something that monetary policy can – and should – address. Drivers of inflation persistence At this point, I will focus on one specific inflationary shock that we have recently faced, namely the significant rise in imported energy prices stemming from Russia’s invasion of Ukraine and its implications for European wholesale natural gas prices. [12] Once we focus on intrinsic inflation persistence, by nature we have to focus on a specific shock. It is the change of economic responses to that shock – in particular, changes in price and wage setting behaviour – that determine how the intrinsic persistence of headline inflation will evolve. Drawing on a previous talk,[13] let me first establish four relevant features of the shock. (1) It came as a genuine surprise to monetary policy makers, in the sense that it was neither anticipated nor anticipatable at anything other than a short horizon. [14] (2) The resulting rise in European wholesale gas prices was transmitted to UK CPI inflation (via both direct effects on household energy bills and indirect channels through the energy costs of producers of goods and services) in the course of a few months, and thus substantially more quickly than the typical 12-24 month lag in monetary policy transmission. [15] (3) The shock was very large by historical standards.

1  BIS Review 62/2000  The difficulty we face is that, while some part of sterling’s rise in the past few years probably reflects underlying strengths in the UK economy - the sustained growth in activity in recent years and the more flexible and competitive structure of the economy - it is very likely that sterling at its present levels is unrealistically high, and that this is principally a reflection of the persistent weakness of the euro over the past year or so rather than factors directly related to sterling. To compound the difficulty, it is in fact very hard to see why the euro has remained relatively weak at a time when growth in the euro-area economies as a whole has recovered strongly. For the moment, in judging the appropriate level of interest rates, we take very carefully into account the weakness of the UK’s external sector, and the impact particularly on manufacturing, as an immediate factor off-setting in part the buoyancy of domestic demand. But we also have to take into account the possibility further ahead that, if the exchange rate moves back to more realistic levels, as we expect, the boost that could bring to external demand could only be accommodated, without strain on the supply capacity of the economy as a whole, if domestic demand has moderated.
The importance of “push factors” has increased over time as monetary policy and financial stability shocks in advanced economies have become both more prevalent and more potent. And push factors are arguably becoming more important as the fundamental asymmetry at the heart of the global economy deepens. When the IIF was founded, EMEs made up a little more than 1/3 of global GDP. Since the last Fed tightening cycle, their share of global activity has risen from around 45% to 60%. By 2030, it is projected to rise to around three quarters. But while the real global economy is being reordered, the international monetary financial system has barely begun its transition. The dollar represents the currency of choice for at least half of international trade invoices, two-thirds of global securities issuance, it denominates two-thirds of EME foreign currency external debt and acts as the monetary anchor in countries accounting for 70% of global GDP.14  14  Gopinath, Gita, and Jeremy C. Stein. (2018) Banking, Trade, and the Making of a Dominant Currency, Working paper, Harvard University, Cambridge, MA. Gourinchas, P, Rey, H Sauzet, M (2019), The International Monetary and Financial System, NBER Working Paper No. 25782. 10  All speeches are available online at www.bankofengland.co.uk/speeches  10  In fact, the dollar is as dominant today as it was during the Bretton Woods era, and is likely to remain so for some time, as its roles in international payments, as a reserve asset and a funding currency are mutually reinforcing.

Jean-Pierre Roth: SNB commemorative publication “The Swiss National Bank 1907-2007” Remarks by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the launch of the commemorative publication “The Swiss National Bank 1907–2007”, Zurich, 21 June 2007. *  *  *  Ladies and Gentlemen It is with pleasure and some pride that I present our commemorative publication today or – as the German language puts it so well – our festschrift, or celebratory work. There is indeed good reason to celebrate. One hundred years of doing business, crowned for the most part with success, certainly warrants celebration. The publication of a festschrift is one of the events being held to mark this anniversary. It is the fourth such work to be published, following on from those of 1932, 1957 and 1982. It is somewhat different, however, insofar as it commemorates an entire century of the National Bank’s existence. We wanted this commemorative publication to be a learned work, which at the same time is accessible to a very broad readership. We wanted it to be both unpretentious and modern, yet in keeping with the tradition of the previous works. I make no secret of the fact that significant resources were deployed to prepare the book. Work first started over three years ago and some fifty or so bank employees were involved in the project.
That would enhance the abilities of the members to exert peer pressure, which may in turn help reduce “inaction bias”. When it comes to identifying, analysing and monitoring financial stability risks at EU level, many pieces of information are necessary. The processes for handling all the diverse inputs as well as our assessment tools have developed more or less of necessity. To really get the big picture we must understand how the individual pieces connect to each other and we must be able to put them all  |4  together. All in all, I think the ESRB nowadays makes good use of the broad scope of inputs from members with different expertise, connecting all the dots and their inherent dynamics from a truly system-wide point of view. A new supervisory and regulatory landscape for the EU… Of course, the ESRB was not the only response to the structural flaws in the supervisory framework which were exposed by the financial crisis. A whole new financial supervisory and regulatory landscape has by now at least roughly found its shape and form in the EU, although there are still some pieces of the puzzle that have not yet fallen into place. I should also say that I do not think that the landscape will ever be completely finalized. That would be a bad idea. These frameworks need to evolve and adjust as we move ahead, as we learn from our experiences and as the financial system which they target is constantly evolving.

Gazi Erçel: Focus on inflation targeting  Opening remarks by Mr Gazi Erçel, Governor of the Central Bank of the Republic of Turkey, made at the Conference on Inflation Targeting which was organized by the Central Bank of the Republic of Turkey in Ankara on 19 October 2000. *  *  *  I am very honored to present the opening remarks at this conference on Inflation Targeting (IT) Framework. First I would like to extend our appreciation to the lecturers of the Conference who came a long way geographically, and considering the state of the economy they reach. The issues that are going to be addressed will be of great interest, particularly for developing and dis-inflating countries. The attendance of so many speakers from the Central Banks and international institutions is particularly motivating. This Conference will review the country experiences on inflation targeting, particularly touching on the best ways to design policy objectives, responses, and implementation issues. Some papers will consider not only inflation targeting framework, but also the case of economies during the shift to low inflation. Let me begin my remarks by focusing on a framework that has been widely validated among academics and policymakers during the last 10 years. Inflation targeting is an innovative approach to monetary policy being applied by a growing number of central banks of not only industrial but also emerging market countries of the world. Now, more than ever, businesses are operating in a rapidly changing world. Even the marginal uncertainties have become important.
In the case of mining production, although its impact on GDP of the first quarter is significant as it is determined mostly by supply-side factors, it is deleted from the Other GDP calculation that the Bank uses in its models to measure the activity gap and the medium-term inflation outlook. Thus, the change in the projected range for 2017—of half of one percentage point— responds to two major factors. On the one hand, about half is explained by Escondida mining downtime and other incidents during the first quarter. On the other hand, the greater weakness we saw in the course of 2016 gives a lower starting point for the economy this year. In particular, because this weakness has been observed in sectors that tend to be more persistent in their dynamics, such as construction and associated areas. We must not forget that this sector received a significant boost in 2015, which lasted into early 2016, as a result of the new VAT that would be charged to the sector under the tax reform. Such reduced strength responds largely to the end of this boost. There is also the effect that the lending standards of mortgage loans have tightened too, given the higher down payment demanded by the banks. Another important issue worth looking into are the changes in inventories over recent years. The year 2016 completed three years of inventory depletion, which is quite uncommon. In general, inventory movements reflect how companies predict the future: if they are optimistic about it, they accumulate, and vice-versa.

And that would have meant eventually having to tighten policy more abruptly, which would much more certainly have plunged the economy into serious recession, a bit further down the road. The harsh reality is that monetary policy can only target the economy as a whole - it cannot realistically seek to shelter particular businesses or particular sectors or particular regions, however much we might all wish it were otherwise. And, in relation to the economy as a whole, the effective choice in the situation we faced was not whether or not to tighten, but whether to tighten sooner, and by less, or later, by more. So we raised interest rates through the second half of last year - and again in June - trying, as best we could through our tactics, to minimise any further unwanted upward pressure on sterling. But things have now clearly moved on. The outlook for the world economy deteriorated further through the summer under the impact of a series of new shocks. Japan, the world’s second largest economy, slipped further into recession. Russia - which had only weeks earlier embarked on an IMF program - saw the collapse of the rouble and default on its debt. And acute nervousness spread through many of the world’s financial markets. Although there has been some improvement in sentiment over the past month or two, and although the US and European economies continue to expand, the likelihood remains that world economic growth will be significantly slower than had been expected earlier in the summer.
Changes in production methods, including an altered pattern for adapting stocks and new technology, may have enabled the demand and supply for both goods and capital to be matched more quickly than before, which contributes to the milder downturns and longer upswings. A further factor that could have contributed is that the percentage of services in GDP has increased and the production of services has shorter lead times. Expansive economic policy - good years for the Swedish economy A low inflation rate and tidy public finances have provided room for manoeuvre when facing a downturn in economic activity. A changeover towards a more expansionary economic policy in a large number of industrial nations has laid the foundation for the recovery this year. In the USA there was a substantial change in monetary policy at the beginning of 2001. On top of this came considerable fiscal policy stimulation. Monetary policy in Europe and Sweden has also been expansionary. However, many large countries in Europe are still struggling with large budget deficits, which have limited their fiscal policy scope for action. Last year Sweden had one of the largest surpluses on public savings in the EU. This has enabled an expansionary fiscal policy. This year households’ disposable incomes are expected to increase by almost 5 per cent, almost 80 per cent of which comes from increased transfers and lower taxes and charges. Such a large increase in income has only happened on a few occasions over the past decades.

It is not mumbo jumbo that a productivity level of around 1.5 per cent and an inflation target of 2 per cent are incompatible with wage rises of 4 per cent. The scope for wage rises is a maximum of 3.5 per cent at normal profit levels. Our assessment of wage developments in the coming two years is around 4 per cent, i.e. a level that is not compatible with the inflation target, unless productivity develops better than expected. Higher wage increases than expected were one of the causes behind the Riksbank’s two interest rate hikes in March and April. However, wage increases differ between the different sectors and different professional categories. Particularly high wage rises can be noted in the service industries. In some parts of these industries the wages for white-collar workers have increased more rapidly than those for blue-collar workers. This, together with considerable problems in attracting qualified personnel to certain parts of the public sector, entails a risk of a greater wage drift, particularly in a situation where economic activity has improved. Relative wage changes are a normal element in a dynamic economy, but the Swedish labour market has previously shown that large relative changes often lead to a compensatory wage drift. Some large groups have had wage rises of around 5 per cent - this applies to the service industries, the construction sector and white-collar workers in industry - but no large group has received less than the 3.5 per cent that would be necessary to achieve the inflation target.
They responded positively to the Bank’s recommendations, and there was no question that credit growth slowed substantially. However, there are now many indications of a return to the earlier situation, so the Bank must reiterate its words of warning. At the same time as the Central Bank announced its interest rate decision yesterday, it published Monetary Bulletin. This outlines the main assumptions behind the Bank’s decision along with indications about its policy in the near future and the viewpoints it considers important to bear in mind for economic policy. In the current edition, major changes were made to the assumptions behind the baseline forecast, which enhance both the credibility of the forecast and monetary policy transparency. By doing so, the Central Bank of Iceland joined the vanguard of the inflation-targeting central banks. Monetary Bulletin reveals that inflation developments have turned rather more favourable than the Bank’s previous forecast had indicated, and although underlying inflation was somewhat higher in February and March than was hoped, the Bank expects both headline and underlying inflation to decrease rapidly in the next months. By both measures, inflation will be close to target from the middle of 2008. There is no doubt that this outcome is largely thanks to the tight monetary stance, which included raising the policy rate by 3.75 percentage points last year. As usual it should be pointed out – and especially in the current climate – that exchange rate uncertainties can complicate this picture.

The same may undoubtedly be said about the Central Bank. After all, useful and supportive as these institutions may be, they neither can nor should play a leading role. That role can only be performed by the financial companies themselves. Because they rely so heavily on open access to credit markets, it is crucial for them to enjoy the confidence of their creditors. In this respect like many others, credibility is a fragile thing and a very high price can be paid for losing it. Turbulence in global markets is sure to continue. Naturally people try to read the signs and foresee the most important parameters, in order to adapt to them in good time or respond sensibly. Important as it is to keep a close watch on developments and changes in global markets, what matters most of all is to be strong and well-positioned enough to withstand the most unexpected shocks. Global liquidity has been exceptionally abundant in recent years, and has been widely tapped on good terms. The benefits of resourcefulness and bold, quick action can be realised to the full in such circumstances. It is impossible to rule out that such a climate will persist for a long while, but this is by no means certain. And when a change does take place, it may be caused by unexpected circumstances and strike quickly. It is then that caution and prudence prove most effective.
Benefits range from a consistent and standardised application of rules and processes, to seamlessly harnessing the individual institution’s respective infrastructure and promotional activities to realise cost savings arising from the sharing of scarce capital. In the quest for efficiency in the payment systems of the nation, an essential task for the banking industry is thus to strengthen the focus on meeting the specific demands of the consumers, and at the same time, forging alliances in common infrastructure building. The FPX is a right step forward in this direction. The efficiency of the financial system will be further enhanced with the FPX that reduces transaction costs and contributes to the overall functioning of the economy. This advancement forward can only be successfully achieved when there is active participation by the banking institutions, individuals as well as businesses, in utilising and promoting the system nation-wide. Bank Negara Malaysia strongly encourages all banking institutions and users to participate in the FPX to exploit its full potential, a process that would contribute towards the competitive positioning of the Malaysian economy. Ladies and Gentlemen, Economic expansion hinges on the effective intermediation function of the financial system, and the efficiency of funds flow is integral to the overall functioning of the system. To gain significance as a trading nation, the strengthening of commercial facilities, including e-commerce, is pivotal to the process.

More than 90% of the non-cash retail payments in Malaysia are made by way of issuing cheques, albeit at a slower average annual growth rate of 2% in the recent two years, compared to the use of the Inter-Bank Giro which has increased at the rate of 197%. In most developed countries, the use of cheques has declined to negligible levels compared to electronic payments. These trends underpin the need for the banking institutions to further intensify efforts to encourage consumers and businesses to use the electronic payments systems. Promotional programmes and greater consumer education activities also have to be escalated to promote confidence in Internet transactions and the use of electronic means of payments. The need to build up consumer awareness is essential in an environment that is becoming increasingly challenging and complex. Consumers need to be informed and convinced that the payment infrastructure is safe, efficient and reliable, and that there is an adequate consumer protection mechanism for consumers to be able to confidently use and enjoy the advantages of a low cost and effective payment system. One of the main challenges is to combat fraud. The rising incidences of Internet-based identity theft and phishing scams globally require the banks to remain vigilant about the possible security risks and employ effective security measures and internal procedures to protect their customers. Banks should remain one step ahead in this endeavour.
Plosser, Charles (2018), “The risks of a Fed balance sheet unconstrained by monetary policy”, in M. Bordo, J. Cochrane, and A. Seru: The Structural Foundations of Monetary Policy, Hoover Institution  10 [16]  Rachel, Lukasz and Thomas Smith (2015), “Secular drivers of the global real interest rate”, Bank of England Working Paper No 571 Sims, Christopher (2016), “Fiscal policy, monetary policy and central bank independence”, Jackson Hole Symposium, Federal Reserve Bank of Kansas City Sveriges Riksbank (2009), “The monetary base – the Riksbank changes statistical definition”, memorandum, 16 April Sveriges Riksbank (2012), “Securities portfolio in Swedish kronor”, press release, 10 May Sveriges Riksbank (2014), “The Riksbank’s operational framework for the implementation of Monetary Policy – a review”, Riksbank Studies Sveriges Riksbank (2017a), “The long-term repo rate”, article in Monetary Policy Report, February Sveriges Riksbank (2017b), “The Riksbank’s experiences of publishing repo rate forecasts”, Riksbank studies, June Walsh, Carl (2017), Monetary Theory and Policy, fourth edition, MIT Press Woodford, Mark (2000), “Monetary policy in a world without money”, International Finance 3, 229-260. Yu, Edison (2016), “Did quantitative easing work?”, Economic Insights, First Quarter 2016, Federal Reserve Bank of Philadelphia  11 [16]  Figures Figure 1.

The interest rate differential reflects high demand growth and high wage growth. There is a clear relationship between wage growth, interest rate expectations and the krone exchange rate. The appreciation of the krone dampens inflation, and at the same time weakens profitability, employment and the capacity to cover labour costs in the internationally exposed sector. The krone can move in both directions. It will not appreciate indefinitely. Sustained lower wage growth will be accompanied by a narrower interest rate differential and it may reverse movements in the exchange rate. A declining level of wage growth would provide a strong impetus to the internationally exposed sector. The interest rate could be reduced. This would lead to a depreciation of the krone, with a further improvement in earnings and employment. Over the last thirty years, manufacturing has been scaled back in waves. There was substantial downscaling in the years from 1977 to 1984 and 1987 to 1992 in particular. In the years leading up to the periods of contraction, profitability deteriorated in the manufacturing sector. It can take time before such a deterioration translates into lower output and employment. But when the turnaround does occur, it tends to be swift and hard-hitting. It now appears that a new period of downscaling is under way. Several factors point to this: First, productivity growth is higher in manufacturing than in other industries. This has resulted in a trend decline in the numbers employed in manufacturing in Norway, as it has in other OECD countries.