samchain/econo-pairs-v1 huggingface dataset:
Interest rate decision Given the outlook for economic developments and inflation that I have outlined here, we decided yesterday to leave the repo rate unchanged. As the economic upturn progresses and resource utilisation increases further, it is reasonable to assume that monetary policy will in future need to become gradually less expansionary. There is nothing dramatic about this; rather, this is normally necessary in an economic upswing to ensure that the inflation target is attained and that economic developments in the period ahead are stable. It is also what most forecasters appear to be expecting. However, it is worth emphasising that it is not possible at present to determine exactly when it may be appropriate to make a first adjustment of the interest rate level. This will depend as usual on how the Riksbank assesses the inflation outlook and on the new information received regarding economic developments. Thank you. BIS Review 59/2004  7  1. Averages for the periods 1970-1989 and 1995-2003 9  9  8  8  7  7  6  6  1970-1989 1995-2003  5  5  4  4  3  3  2  2  1  1  0  0 Inflation  GDP growth  Real wage increase, whole economy  Change in productivity, whole economy  Source: Statistics Sweden  2.

To sum up, we can conclude that the low inflation outcome in 2004 cannot be attributed to a monetary policy that was contrary to the consensus view at the time. Instead, it was essentially a result of developments that practically nobody managed to foresee. Another possible conclusion is that we would have had to conduct a dramatically different monetary policy if inflation was to have turned out much closer to the target in 2004. For example, the Riksbank would probably have had to cut the repo rate rapidly and sharply at the beginning of 2002. Such a stance would most likely have caused something of a stir. Inflation was high at that time and nobody predicted the kind of dramatic decline that would have justified a substantial rate cut. To give you an idea of the sentiment at the time, one of the country’s leading trade union representatives warned us not to take the inflation target lightly. 2  BIS Review 18/2005  Has policy been asymmetrical? One recurrent feature of the recent discussion is claims that the Riksbank is more concerned about high inflation than low inflation. It has been said that inflation since the introduction of the Bank’s target – from 1995 onwards – has turned out somewhat below target on average. Personally, I can understand fears that central banks could be ”overly zealous” in their fight against inflation, especially if a country has experience of a high-inflation regime, as is the case in Sweden.
How aggressively should inflation stabilisation be pursued when doing so imposes costs in terms of lost output and higher unemployment? Low, stable and predictable inflation is a public good. It is not merely that rising prices mean households have to shop around or businesses have to update their prices periodically. High inflation hurts those, particularly the worst off in society, who don’t hold equities or property as well as those whose incomes are fixed in nominal terms. It distorts price signals, inhibits investment, and can ultimately damage the productive potential of the economy. Equally, deflation can imperil growth and employment. In a highly indebted economy, deflation raises real interest rates, increases debt burdens, lowers wages, and reduces growth. In the extreme, these can morph into debt deflation, causing very high and persistent unemployment and financial collapse. The happy medium is low, stable, predictable inflation over the medium term. A little inflation ‘greases the 1  wheels’ of the economy, for example by helping real wages adjust more smoothly. Moreover, a positive inflation rate gives monetary policy space to deliver better outcomes for jobs and growth when shocks hit, without the distortionary costs of high and volatile inflation. 2  Recognising the social value of inflation control is one thing, delivering it is quite another. In the past, many societies could not. This is because the instrument that affects inflation most powerfully – monetary policy – also affects output and employment, at least in the short run.

But the remits recognise that circumstances are possible “in which attempts [by the MPC] to keep inflation at the inflation target could exacerbate the development of imbalances that the FPC may judge to represent a potential risk to financial stability”. In such a case, the MPC “may wish to allow inflation to deviate from the target temporarily, consistent with its need to have regard to the policy actions of the FPC.” In the event of such a judgement by the FPC, the MPC will have to weigh the appropriate monetary policy response within the context of its inflation target and its secondary objective to support the Government’s economic policy objective to achieve strong, sustainable, balanced growth. In effect, the MPC’s loss function could be modified to include proximate indicators of financial stability (that are considered by the FPC): 𝐿𝑜𝑠𝑠𝑡 ≡ (𝜋𝑡 − 𝜋 ∗ )2 + 𝜆(𝑦𝑡 − 𝑦𝑡∗ )2 + 𝟏𝐹𝑃𝐶 𝛽(𝒔𝑡 − 𝒔∗𝑡 )2 where 𝒔𝑡 is a vector of financial stability indicators, 𝒔∗𝑡 are the levels judged consistent with stability, and whose differences are given a weights of 𝛽. The indicator variable 𝟏𝐹𝑃𝐶 takes a value of one if the FPC judges there to be potential risks to financial stability, and is zero otherwise.
Notes: The measure of inflation is the four-quarter change in the harmonised index of consumer prices (HICP). The output gap is the IMF’s estimate from the October 2016 WEO at an annual frequency, interpolated to create a quarterly series. 24  All speeches are available online at www.bankofengland.co.uk/speeches  24

Union Pay International (“UPI”), headquartered here in Shanghai, signed a MOU with  NETS, a leading payment services group in Singapore, in November this year to support cross-border connection of their mobile wallets. As UPI’s first cross-border tie-up with another nation’s mobile wallet – NETS’ NETSPay platform – this will allow Chinese customers to pay at NETS merchants in Singapore while Singapore’s NETSPay users can make mobile payments at over 8 million merchants in China. The MOU will also support collaboration on technology know-how between UnionPay and NETS, and facilitate the joint setting up of a research and development centre in Singapore, initially focusing on mobile services technology. 2nd MAS – SFRB Training and Exchange Programme  Lastly, deepening information and knowledge exchange between Shanghai and Singapore industry participants and officials. 10  The 2nd MAS-Shanghai Municipal Financial Regulatory Bureau Training and Exchange Programme will be held from 28 to 30 November 2018. Such training a . programmes will encourage mutual exchange and deepen ties between financial regulators, promote better understanding of each other’s markets and enhance their knowledge in specialised topics. Conclusion 11 Asia remains strongly committed to maintain an open global trading system and to  preserve multilateralism. There is therefore great potential for Asian countries to ride on each other’s growth, and for cities like Shanghai and Singapore to strengthen our bonds.
Of course, openness also brings with it greater exposure to external shocks, particularly for small economies that cannot aspire to any degree of self-sufficiency. Experience, however, suggests that such exposure does not necessarily translate into vulnerability for small economies if they are closely integrated with larger ones. For example, the greater resilience of countries in Central and Eastern Europe over that of a number of other transition economies has been 2 attributed to the relatively stronger trade links which the former have with rich, neighbouring countries. In addition, the latest IMF World Economic Outlook shows that over the past 25 years less integrated economies exhibited a higher degree of susceptibility to financial crises than economies with strong trade linkages, and that financially integrated economies in turn experienced a lower degree of output 3 volatility than those with closed financial markets. This suggests that trade and financial integration with major trading partners remains a preferred option. This conclusion is borne out by the experiences of small states such as Luxembourg and Singapore. The fundamental characteristics of these countries resemble Malta’s in that they too are small open economies which lack natural resources. Both, however, have achieved far higher levels of 4 prosperity. Luxembourg, for example, with a population only slightly larger than that of Malta has a per capita income three times higher. This success is attributed to Luxembourg’s ability to reap economies of scale by integrating with larger, prosperous territories in a way that has permitted high-value, export-oriented firms to flourish alongside domestically-oriented ones.

Third, the opportunity cost of staying 21 out of the EU will increase for export-oriented firms. And finally, since the ACP (African, Caribbean and Pacific) countries that are parties to the Cotonou Agreement are an important source of raw materials for the EU itself, the duty-free access of their raw materials should actually benefit Malta which imports all its raw material needs. In the process local firms would, of course, also become subject to competition from countries covered by reciprocal trade agreements with the EU, and inefficient and high-cost producers in Malta could well be driven out of the market. To a great extent, however, this adjustment is already taking place, not least because the removal of import levies is well underway. Thus, while there could be some increased costs, the effects on unemployment should be limited. In any case, both the Government and the EU have mechanisms designed to assist uncompetitive firms. It could also be argued that some job losses are inevitable if we really want to give consumers a better deal while promoting the competitiveness of domestic firms. A short-term increase in unemployment, moreover, could well be reversed. This is not an unrealistic expectation. Investors from non-EU countries will find that they would be in a better position to tap the enlarged EU market by consolidating their activities in the new members than by accessing these markets separately.
Europe is once again standing at a crossroads. The 2007–2008 global financial crisis and the 2011 sovereign debt crisis in the euro area have left a legacy of foregone growth, high unemployment, and massive public debts. On top of that, Europe’s security has been directly affected by the scourge of terrorism that targets our population and our values, and moreover we have not yet found lasting solutions to the refugee crisis. And yet, despite all these challenges, support for the euro and the European Union is still high: according to the Eurobarometer survey, 72% of euro area citizens support the euro, the highest level since 20042, and more than half of EU citizens feel attached to the European Union3. The clearest signs of this continued support for the European project – despite Brexit, beyond Brexit – are the recent defeats of the nationalist parties and their euroscepticism in a number of European countries. Whenever the temptation of reverting to nationalism arises, we should remember Tommaso Padoa-Schioppa: he liked to remind us that the founding fathers of the European Union – among whom Robert Schuman, Konrad Adenauer and Alcide de Gasperi – shared the same motto: “never again a war among us.” In the very uncertain world of 2017, and with the dangerous hesitations of the new American administration, this is sadly very relevant: peace remains the first European promise. This is the reason why our common responsibility is to persevere along the path of European integration. But we cannot continue as before. People expect concrete results.

8  12  14  16  18(f) 20(f)  Figure 5 Total, trend, and potential GDP (1) (annual change, percent)  6  6 Total GDP (2)  5 4  4  Trend GDP  3  5  3  Potential GDP  2  2  1  1  0  0  -1  -1 12  13  14  15  16  17  18  19  20  (1) For more details on trend and potential GDP, see "Trend growth: Medium-term Forecasts and Analysis of its Fundamentals", published in Spanish together with the September 2017 Monetary Policy Report. (2) Total GDP uses actual data up to 2017 and for subsequent dates the forecasts contained in the March 2018 Report. Source: Central Bank of Chile. Figure 6  Parities with respect to the US dollar (index, 2017-2018=100)  110  110  106  106  Latin America  Chile  102  102  98  98 Commodity exporters  94  94  90 1717  90 17 Mar. 17 May  17 Jul. 17 Sep.  Sources: Central Bank of Chile and Bloomberg. 9  17 Nov.  18 18  Mar.18  Figure 7  Nominal exchange rate (*) (pesos per dollar)  680 660  680 JAN-MAR 2018 Avg. DXY=90.2 670 Avg. copper=316 2018 growth (EES)=3.3 660  650  650  640  640  630  630  670  620  620  JAN-JUN 2017 Avg.
The interest rate reductions and the fall in the krone exchange rate imply that inflation will gradually increase and will be considerably higher than the current level as early as next spring. After such a period of very low inflation as we have now witnessed, it is appropriate to be particularly vigilant in monetary policy in the event that inflation does not increase as projected. 2  These estimates are uncertain and must therefore be interpreted with caution. The analysis of developments in the exchange rate from May 2000 to January 2003 is discussed in more detail in Bjørn Naug (2003): “Faktorer bak utviklingen i kronekursen – en empirisk analyse” (Factors underlying developments in the krone exchange rate – an empirical analysis), in Norges Bank’s Occasional Papers, no. 31 (Norwegian only). 3  These projections are discussed in more detail in Norges Bank’s Inflation Report 3/2003. The analyses are based on the technical assumption that the interest rate will move in line with expectations in financial and foreign exchange markets, implying that the interest rate will remain at the current level well into 2004. Thereafter, the interest rate in Norway is assumed to rise gradually in pace with interest rates in other countries. The forward exchange rate implies a moderate depreciation of the krone through the projection period. 4  BIS Review 53/2003  Share of employment back at trend As mentioned earlier, developments in the output gap are a measure of output stability.

We believe that expectations play an important role when prices and wages are set. Expectations concerning future inflation and economic stability have considerable impact, not least in the foreign exchange market. Inflation expectations also influence wage demands and have an effect when companies adjust their prices. It may be difficult to form an opinion about how expectations are generated. Confidence in the inflation target may provide an anchor. Past inflation rates may also influence what we think inflation will be in the future. There is thus an interaction between inflation expectations and inflation. If there is confidence in monetary policy, expected inflation will be equal to or close to the inflation target. This contributes to stabilising inflation around the target. The expectations channel thus amplifies the effects of monetary policy. We therefore place considerable emphasis on ensuring that households, companies, the social partners and financial market participants are confident that inflation will remain low and stable. To the question of how high prices are expected to rise, companies, the social partners and others answer that they expect a rise of 2½ per cent over time. Financial market participants also expect future inflation to be 2½ per cent. This is reflected in developments in long-term bond yields. This indicates that monetary policy has underpinned confidence that future inflation will be 2½ per cent. Consumer price developments There were wide fluctuations in the Norwegian economy in the 1970s and 1980s. Economic developments were marked by high and variable inflation.
1  BIS Review 82/2000  During this period, the Fed has looked at a large number of economic and financial indicators in an attempt to control inflation and smooth the business cycle. And, as I said, the Fed responded reasonably well to these events with fairly modest changes in its interest rate settings. Many among you are in a much better position than I am to know how much the US experience applies to Europe. I do want to mention, however, that an economist at our Bank, Glenn Rudebusch, recently did some research with Lars Svensson that questions the usefulness of monetary targeting.1 Now let me turn to the challenges for US monetary policy over the past five years or so. As I mentioned, these have been primarily on the real side of the economy. And while the developments in the US economy have been quite favorable, they’ve also been unanticipated, which has added substantially to the uncertainty we face as policymakers. The current economic expansion is now in its tenth year. It has lasted longer than any other in US history, and it has been remarkably strong. Real GDP growth averaged 4½% over the past four years and 6% over the past four quarters! The unemployment rate continues to hover around 4%, near its lowest level in thirty years. And core consumer inflation has averaged between 1¾ and 2½% over the past four quarters, depending on the measure used. Finally, US productivity has been truly remarkable.

The banking union represents one of the greatest achievements of European integration. Banks are now supervised at the European level, which enables risks that transcend national borders to be identified. Completing the banking union, in particular by setting up a European deposit insurance scheme, should be a priority for national governments. If we look back 40 years, it’s clear that Spain today is a more prosperous and modern country. However, we must not forget that much remains to be done. Improving the functioning of the labour market is still an outstanding issue – more than 3 million people remain unemployed, and the youth unemployment rate is still above 30%. But there are grounds for optimism. Following the collapse in GDP during the hard years of recession, Spain, supported by the European Central Bank’s measures, has reached an annual growth rate of 2.8% over the last five years, well above the European average. Spurred by the need to search for new markets during the years in which domestic demand tightened4, Spanish businesses have managed to find opportunities overseas and many are now global leaders in their sectors. Spanish society has worked very hard to return to economic growth after almost a decade marked by the crisis, and it has done so while remaining true to its commitment to Europe. 40 years ago the Spanish people voted for a better country – one that was democratic, open and modern. The 1978 constitution and the process of European integration have enabled us to make this better country a reality.
4 Jerome H. Powell, New Economic Challenges and the Fed’s Monetary Policy Review, Speech at “Navigating the  Decade Ahead: Implications for Monetary Policy,” an economic policy symposium sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming (via webcast) (August 27, 2020). 5 Richard H. Clarida, The Federal Reserve’s New Monetary Policy Framework: A Robust Evolution, Speech at the  Peterson Institute for International Economics, Washington, D.C. (via webcast) (August 31, 2020). 2/2  BIS central bankers' speeches

Higher demand leads to higher output and employment. Wage growth may pick up. Higher wage growth combined with higher profit margins will result in higher inflation. Lower interest rates normally lead to a depreciation of the krone. Imported goods then become more expensive and inflation accelerates. Expectations play a key role in price and wage formation, and they are influenced by the interest rate. Expectations concerning inflation and economic stability have considerable impact, not least in the foreign exchange market. Petroleum activity constitutes an important part of the Norwegian economy. Oil gives us an economic base that is not available to many other countries. At the same time, the extent of, and fluctuations in, petroleum activity pose a challenge to economic policy in Norway. In a long-term perspective, Norway’s petroleum wealth is to be distributed across generations. The authorities must therefore exercise fiscal discipline, taking into account long-term considerations. In the short term, the substantial capital revenues from the petroleum sector must be managed in such a way that they do not amplify cyclical fluctuations. The Government Petroleum Fund was established in 1990 with a view to safeguarding long-term considerations in the use of petroleum revenues. The idea behind the Petroleum Fund is that the cash flow from an increase in oil prices should accrue to the Fund and be invested abroad and that the increase in oil prices should not affect the wider budget. As a result, the increase in the cash flow does not affect the domestic economy.
As such we found ourselves pursuing austere macroeconomic policy, which worked to curtail excessive spending and restrain aggregate demand, thereby improving Thailand’s external accounts and stemming capital outflows. At the same time, we had to adopt stricter prudential standards to raise confidence in our financial institutions. Banks inevitably had to scramble to raise capital in order to meet the provisioning requirements under our new and stricter definition of “non-performing loan”. In addition to the adoption of international best practice with regard to asset classification and provisioning, other banking practices had to be upgraded. For example the industry has had to get used to a new way of doing business, pursuing good corporate governance, improved disclosure, stronger accountability and better risk management and control. These are indeed significant changes from the traditional way business had been conducted in the past, and in turn will need commitment of management and staff, inputs and resources to bring the industry to full compliance with international best practices, not to mention a new supervision framework for the authorities. The new financial institution law, pending consideration by Parliament, will provide the BOT with a clear mandate and accountability to regulate and supervise financial institutions under a new framework, including such procedures as prompt corrective action, and reduced scope for use of judgment, among other things. On our part, the central bank has also gone through a process of self-examination.

This has allowed the banking sector to have a different focus from the one it had during the global financial crisis in 2008 or during the local problems in the sector in 2014. In these previous episodes, the banking sector was mainly engaged in solving problems within the sector. In the Covid crisis over the recent two years, the banking sector was not concerned with its own problems, but mainly with alleviating the effects of the crisis on businesses and households and subsequently with the recovery and speed-up of the economy. In this sense, the Covid crisis legitimised an important qualitative change in the position of the banking sector – from a source of problems in the past to an important factor in their resolution in recent years. Significantly, the banking sector absorbed and implemented successfully and without shocks the anti-crisis package of measures approved by the BNB, amounting to about 9% of the GDP, as well as a private moratorium on loan repayments by businesses and households. At the same time, credit activity not only did not stagnate, but increased. According to the latest data from the 2021 monetary statistics, loans to businesses and households grew year-on-year by 4.1% and 12.5%, respectively. Good operational performance was underpinned by progress on important strategic tasks. October 2021 marked the one-year anniversary of the country’s accession as a full member to the European Banking Union. The assessment of this participation by both the ECB and the BNB is unequivocally positive.