samchain/econo-pairs-v1 huggingface dataset:
Daleep Singh: Creating opportunity out of crisis - extending access to the Fed’s emergency facilities Remarks (via videoconference) by Mr Daleep Singh, Executive Vice President and Head of the Markets Group of the Federal Reserve Bank of New York, at the National Association of Securities Professionals’ 15th Annual Legislative Symposium, 10 September 2020. * * * As prepared for delivery Good afternoon, and thank you, Guy, for the kind introduction. I must say, it's a bittersweet feeling to speak before you today. I'm honored to have the privilege of addressing this gathering, and I want to express my deep gratitude to you, Ron Parker, and the entire NASP membership for engaging with the New York Fed in our response to the COVID pandemic. But the context is tragic—we continue to face the worst public health and economic shock of our lifetimes, hitting people of color the hardest during a summer filled with bitter reminders of systemic racism that continues to plague our society. Today I'll share our ambition to create opportunity out of this multifaceted crisis. As you've heard me say before, we've moved at maximum speed and with maximum care to implement the Federal Reserve's crisis response. In practice, this means our policy execution has been guided by a set of principles, including transparency, governance, accountability, and access. In my remarks, I'll focus on access: what it means, and why it matters in the context of implementing the Fed's emergency facilities.

NASP has engaged actively with us in this effort, and I'll explain why we're committed to building on our partnership through and after the crisis. Before going any further, though, let me note that I am expressing my personal views and not necessarily those of the New York Fed or the Federal Reserve System. I would also point out that the FOMC will hold a monetary policy meeting next week, which puts us well into the blackout period. This means I'll steer clear of discussing our policy outlook, and I won't be able to take any questions, but I look forward to the day when we can gather in person again for a twoway conversation. Context: The Unequal Impact of the COVID Pandemic I'll begin by describing the context. Everyone here is painfully aware that the pandemic has hit the most vulnerable segments of our society the hardest, leading to highly unequal outcomes. Labor market damage has been concentrated among people of color, lower-wage workers, those with the least education, and people with disabilities. Even after recent improvements, unemployment rates for Asian, Black, and Hispanic Americans all remain in the double digits, rising a cumulative 8.7, 7.6, and 6.6 percentage points, respectively, from their pre-pandemic lows. Reductions in labor force participation for those without a college degree have been more than twice as large as those with a degree.
International Capital Flows in the Post-crisis World, September 2019  Banking sector  CENTRAL BANK OF CHILE  The Banking sector in Chile looks solid Bank Financial Strength Index  Chilean financial development (*)  (percent, Moody’s weighted average long-term banks rating)  (relative percent) Banking sector  Saudi Arabia Chile China Malaysia Poland Mexico Peru Thailand Indonesia Philippines Colombia Uruguay Panama South Africa India Romania Hungary Paraguay Bulgaria Russia Brazil Turkey Vietnam Nigeria Argentina Ghana Egypt Ukraine  100 75 50 25 0  CAR  ROA  ROE  Cap./Assets  1-NPL/L Market Cap 100 75 50 25 0  Financial sector  1/CDS  Domestic credit OECD Chile  Derivatives  0  2  4  6  8  10  12  14  16  18  LAC  Branches  EME  (*) Data are relative to the maximum on each dimension at the end of 2016 or to the latest availability. Sources: Moody’s and Central Bank of Chile based on information from BIS, WB, IMF and Bloomberg. Over time, markets have developed adequate FX hedging mechanisms having lower currency mismatches, inflation expectations have become firmly anchored at the monetary policy target level, the CBC has overcome fear of floating and the economy exhibit one of the lowest FX pass-through to domestic prices, financial markets have deepened and the labor market has gained some flexibility.

But neither is it merely a single one: I would characterise it as a two-tiered mandate that includes at least two other objectives without prejudice to price stability: on the one hand “to support the general economic policies in the Union” contributing among other aims to a “social market economy, aiming at full employment and social progress”1; and on the other hand “to safeguard the stability of the financial system”2 Furthermore, I would argue that there is still less of a difference between a dual mandate and flexible inflation targeting in the present economic context : notably, the measures we have taken to offset the effects on inflation of negative shocks such as the global financial crisis or the health crisis have a direct effect on growth and employment. 2/ Average inflation targeting is a flexible tactic, possibly temporary, within a wider strategy of keeping inflation sustainably where expected. But still more importantly, our inflation objective has to be symmetric and medium-term. As regards symmetry, I cannot do better than quoting Christine Lagarde in her impressive speech of September 30th: “In the current environment of lower inflation [compared to 2003 and our previous strategic review] (…) to underpin inflation expectations, we need to ensure that our aim is perceived to be symmetric by the public”3. I personally add that we might therefore be willing to accept inflation higher than 2% for some time, without mechanically triggering a tightening of our monetary stance. Medium-term means that we should judge our inflation performance over a long enough period.
Since then, inflation has moderated to 4.2 percent, in large part due to a decline in energy prices. That's much better than 7 percent, but still more than double our longer-run goal of 2 percent. This inflation target is an important bedrock principle for the FOMC. It provides a "North Star" for policy decisions and helps improve the public's understanding of our goals and actions.3 It has also helped to keep various measures of longer-run inflation expectations remarkably well anchored at levels consistent with our 2 percent longer-run goal.4 Although short- and medium-term inflation expectations rose during the pandemic, these measures have since come down. Indeed, based on the latest reading of the New York Fed's Survey of Consumer Expectations, three-year-ahead expectations have returned to a level nearly identical to its average between 2014 and 2020. Although one-year-ahead inflation expectations in the survey remain elevated, they have declined considerably from the peak level reached in June 2022.5 To understand why inflation remains too high, it's instructive to examine inflation developments in various sectors of our economy. So far, inflation has declined in many categories of commodities and goods, which tend to be more sensitive to interest rate increases. In addition, supply chains, which were severely constrained after the pandemic's onset, have improved considerably. This is something I hear from business leaders from across the Federal Reserve's Second District.

By continuing to usethe our site, agree to our Terms and You can learn moreour about how we use cookies by reviewing our Privacy Statement. of Use"A Privacy Statement. 1 Outside of New York City, however, New York State has faced sluggish job growth as well as ongoing labor shortages. Jaison R. Abel, Jason Bram, Richard Deitz, and  Jonathan Hastings "The Tri-State Region's Recovery from the Pandemic Recession Three Years On," Federal Reserve Bank of New York Liberty Street Economics, April 13, 2023; Jason Bram, "How Did New York City's Economy Weather the Pandemic?" Federal Reserve Bank of New York Liberty Street Economics, April 13, 2023. 2 Mary Amiti, Sebastian Heise, Giorgio Topa, and Julia Wu, "What Has Driven the Labor Force Participation Gap since February 2020?" Federal Reserve Bank of New York  Liberty Street Economics, March 30, 2023. 3 Board of Governors of the Federal Reserve System, Statement on Longer-Run Goals and Monetary Policy Strategy, adopted effective January 24, 2012; as reaffirmed  effective January 31, 2023. 4 John C. Williams, A Steady Anchor in a Stormy Sea, remarks at SNB-FRB-BIS High-Level Conference on Global Risk, Uncertainty, and Volatility, Zurich, Switzerland,  November 9, 2022. 5 Federal Reserve Bank of New York, Short-Term Inflation Expectations Decline; Perceived and Expected Credit Conditions Mostly Unchanged, May 8, 2023. 6 Federal Reserve Bank of New York, Global Supply Chain Pressure Index. 7 Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement, May 3, 2023.
This was pointed out by the Swedish economist Knut Wicksell in 19072: "...the upward movement of prices, whether great or small in the first instance, can never cease so long as the rate of interest is kept lower than its normal rate". Calculations seem to indicate that the neutral real interest rate for Norway is between 2½ and 3½ per cent and it has probably fallen somewhat in recent years. Monetary policy is functioning It takes time for an interest rate reduction to have an impact on inflation. We are now seeing the effects of monetary policy decisions some of which were taken two years ago. The interest rate has affected inflation via the krone exchange rate and via demand for goods and services. In particular, the rise in prices for domestically produced goods and services has picked up. In addition, the reduction in the interest rate has probably contributed to holding up expectations of future inflation even when inflation is low. 2  Knut Wicksell (1907): “The Influence of the Rate of Interest on Prices”, Economic Journal, XVII (1907), pages 213-220. BIS Review 10/2005  3  Norges Bank’s key rate is an overnight rate. The interest rate on deposits and loans with longer maturities will reflect expectations as to future interest rate decisions. As the key rate was gradually reduced, expectations also fell, and banks reduced their lending rates. Monetary policy has had a greater impact because market participants expected the low interest rate to persist over a period.

The large volume of international trade in currency derivatives, which is dominated by banks reduces, premiums and costs for other business sectors and thereby promote cross-border trade in goods and services. It is not a good idea to throw a spanner into the works. The impact on household consumption and housing investment has been substantial. Business investment is now picking up. In Norway, household debt is higher than household deposits. The decline in interest rates has thereby freed up funds. Households reacted relatively rapidly, and growth in consumption picked up. The fall in interest rates pushed up house prices. Turnover in the housing market has been high. Higher housing wealth provides increased borrowing opportunities and thereby also boosts demand for consumer durables. Household debt has risen by around 11 per cent over the past year. High resale home prices have made it more profitable to build new homes, and residential construction is rising. The fall in interest rates has also contributed to sustaining the market value of office premises and commercial property even with a high vacancy rate. With the prospect of higher occupancy rates, prices are now rising. Owing to higher productivity and a drop in sickness absence, it may have taken time for the effects to become visible in the labour market. However, higher demand for labour and falling unemployment is gradually leading to a tighter labour market. High interest rates in 2002 and fiscal discipline contributed to a deceleration in wage growth to a more sustainable level.
President Dudley: Well, if I said it was politically-driven, that would be an unbelievable news story. Because we try to stay as apolitical as possible and set monetary policy, not based on the political winds and fortunes of the different political parties, but what we think is appropriate to keep the economy on an even-keel and to achieve our goals of maximum sustainable employment in the context of price stability. So, we’re basically trying to set the level of interest rates in a way that will keep the economy close to our objective of full employment, with relatively stable price. It’s 2% inflation. That’s sort of where we are right now. So, why are we raising interest rates a little bit? First of all, I would point out that the interest rate rise that we’ve had in place has been extraordinarily gradual. The short-term interest rates that the Federal Reserve sets, the federal funds rate, that range is three-quarters of a percent to 1%. If you lived like I did through the 1970s and ‘80s, you realize that that’s an extraordinarily low level of interest rates. Monetary policy over the last few years has been what we think is accommodative. In other words, it’s been supporting economic activity. As we get closer to full employment, we want to make monetary policy a little bit less accommodative because if monetary policy were too accommodative, we would actually get an inflation problem over time.

BIS central bankers’ speeches  1
When the economy is in steady state, it is in a long-run equilibrium where the effects of all shocks to which the economy has been exposed have worn off, and the expectations of inflation and other variables are fulfilled. It is often called the (long-run) natural rate of unemployment.16 It can be seen as the forecast for unemployment in the very long run (under the assumption that inflation expectations are realised). Long-run sustainable unemployment, unlike long-run average inflation, is independent of monetary policy. It is determined by structural conditions in the economy, such as how the labour market and wage-setting function, what the replacement ratio of unemployment insurance is, by the systems for sick pay and income tax and by the demographic  12  An estimate using the Riksbank’s model, Ramses, in accordance with the effects of various repo-rate paths as described in Svensson (2010), leads to roughly the same estimate of 1.3 percentage points. 13  A 95-per cent confidence interval for the point estimate 1.3(=1/0.75) percentage points gives an interval between 1/1.1= 0.9 percentage points and 1/0.4=2.5 percentage points, corresponding to a confidence interval for the estimate 65,000 unemployed between 45,000 and 125,000. 14  2.6 per cent of 170 per cent is about 4 per cent. 15  Moreover, according to one of Qvigstad’s (2005) criteria for a good policy rate path – applied to unemployment – inflation should normally overshoot the target when unemployment exceeds its long-run sustainable rate.

This is a clear example of how we are harnessing the advances made by the leading institutions within the industry. Furthermore, to encourage those institutions which are not at the leading edge in this field to make enhancements in their internal controls and risk management processes, the New Accord will offer explicit economic incentives to adopt - over time - more accurate measures of risk and more sophisticated means for controlling their exposures to such risks. However, the Basel Committee recognised that relying on uniform rules alone would have introduced certain drawbacks. Rules tend to be inflexible and therefore might preclude or ignore innovation. Applying uniform rules may also fail to account for a bank’s unusual businesses or risk profiles. Consequently, our second pillar, supervisory review, addresses some of those drawbacks. It introduces judgement into the policy mix. Banks and supervisors will exercise discretion in determining capital needs relevant to their particular businesses and risk profiles. That degree of discretion makes the supervisory framework more flexible and better able to adapt to change and innovation. Finally, the third pillar, market discipline, adds greater transparency to the process. When a bank discloses information that offers meaningful insight into its risk positions and exposures, marketplace participants are better able to assess its financial health. Counterparties, investors, rating agencies, and even customers can reward banks that manage their risks properly and penalise those that hold unrealistically low amounts of capital for their risk.
The current account deficit can now be financed through foreign direct investments (FDI) and long-term capital inflows. The FDI inflows were in excess of USD 20 billion in each of the last two years, putting Turkey among the top 5 developing countries in FDI inflows. Fourth, Turkey is one of the few countries with a “convergence story”. Negotiations with the European Union over the full membership status provide a major stimulus to policy makers to put Turkey’s huge potential into life and complete the reform agenda. This agenda consists of next generation policies and reforms that focus on removing structural bottlenecks and improving the economy’s capacity for labor absorption, innovation, and competitiveness. Dear Guests, Turkey has had a heavy structural reform agenda since 2001. However, continuation of structural reforms is of vital importance for the sustainability of economic gains achieved in recent years and for the resilience of the economy to further shocks in the future. The most important structural reform in the pipeline is the social security reform that is expected to significantly improve Turkey’s fiscal balances in the medium and long term. It is also expected to contribute to our domestic savings rate.

Other prominent steps that should be taken include reducing the size of the unregistered economy and broadening the tax base, reforming the labor market to increase job creation and bringing the business environment to a level on par with international competition, re-designing the education system in order to make it consistent with labor demand and to raise the quality of labor force, privatizing the energy market and ensuring energy supply security. These steps together with macroeconomic stability will undoubtedly make Turkey a more competitive country in the international arena. Looking ahead, our main goals are to achieve and sustain price stability and economic growth. Prerequisites are macroeconomic stability, structural reforms and adherence to good governance principles both in public and private institutions. We recognize that economic growth at the expense of price stability cannot be permanent. Together with the EU anchor in place, we are moving decisively to become a trillion USD economy. Thank you. BIS Review 32/2008  3
We are also learning about how best to prepare for the eventual normalization of monetary policy. For example, we may need to update our thinking with respect to the so-called exit principles that we published in June 2011 in order to bring them up to date with developments since then, and ensure they do not unnecessarily constrain our ability to conduct policy in the most effective way today. Those exit principles stated that we would first stop reinvesting, then raise short-term interest rates, and finally sell agency mortgage backed securities over a three-to-five year period. This seems stale in several respects. In particular, how does one time the end of reinvestment given that we now have economic thresholds that govern the timing of liftoff? Also, the thresholds are thresholds, not triggers. Thus it is hard to link the timing of the end of reinvestment to the unknown liftoff date for short-term rates. More broadly, it may be desirable to update our thinking around the path and composition of the balance sheet over time, in light of our capacity to shape this path in a way that mitigates potential costs and risks. For example, the agency MBS portfolio is substantially larger today than it was when the original exit principles were devised. To the extent that the Committee wants to reduce the risk of disrupting market functioning during normalization, it could decide to indicate that it will avoid selling the MBS portfolio during the early stages of the normalization process.

Our tools are more powerful used in combination, and, when their use is explicitly tied to the outcomes we seek to achieve. As a result, the sum is more powerful than the component parts. Risk management is particularly important Risk management is particularly important at the zero bound. At the zero lower bound, once you are caught in deflation, it is very hard to get out. Thus, policymakers need to put considerable weight on this risk and conduct monetary policy with sufficient aggressiveness to ensure that they avoid such an outcome. It is also true that we have less experience with the monetary policy tools used at the zero bound. As a result, there is greater uncertainty around the efficacy and costs of these tools. This pushes in the opposite direction of being more cautious. This means that risk management is essential – what are the costs of being wrong in either direction? Sometimes a cautious, incremental approach may not always be the right strategy. Limits to monetary policy At the zero bound, monetary policy encounters additional constraints. These fall into three broad buckets. First, there are costs associated with non-conventional tools. This means they cannot simply be used without limit, though the appropriate limit will vary based on the outlook and balance of risks. The most obvious example of this is our large-scale asset purchase program.