samchain/econo-pairs-v1 huggingface dataset:
Annual inflation, as measured by the national consumer price index, stood at 1.0% both in the fourth quarter of 2002 and the first quarter of 2003. In April, inflation dropped to 0.7% and amounted to 0.4% in May. This decline is primarily attributable to a basis effect. While inflation of domestic goods has remained fairly stable as of late, inflation of imported goods was relatively volatile. This is a result of oil prices having fluctuated sharply in the recent past. With regard to domestic goods, it is striking that rents have not risen for a while now while prices for other services - particularly public services - have augmented at an aboveaverage rate. The core rate of inflation calculated by the National Bank has stood at slightly below 1% for a while. This year the National Bank began publishing its inflation forecast once every quarter. Our inflation forecast of March 2003 (the dash-dotted green curve in the graph) shows that at that time we assumed, based on a stable three-month Libor rate of 0.25%, that inflation would gradually rise to 2.5% in the fourth quarter 2005. This inflation forecast was based on the assumption that the US economy would see a decisive recovery already from the second quarter of 2003, followed by an upswing in Europe toward the end of 2003. This proved to be too optimistic a scenario. In our latest inflation forecast (red dashed curve) we anticipate a renewed delay in the global recovery of just over half a year.

The data confirm the view that the earlier decline in consumer confidence was mainly due to the adverse effects of the increase in oil prices until November 2000, which dampened private household real disposable income growth. Overall, consumer confidence has continued to remain at a high level, reflecting favourable financing conditions and improving conditions in the labour markets. The latter is indicated by a robust growth in employment and a further decline in the unemployment rate. In addition, tax reductions in a number of euro area countries can be expected to fuel domestic demand this year. All in all, it seems likely that real GDP will continue to expand at a robust pace this year. Hence, there is reason to be optimistic with regard to further economic developments in the euro area. 4  BIS Review 10/2001  Turning to price developments, inflation fell to 2.6% in December, down from 2.9% in November, reflecting the decrease in oil prices in euro terms. Provided that this drop in oil prices and the recovery in the effective exchange rate of the euro are sustained, the annual rate of consumer price inflation is expected to fall to below 2% in the course of the year. However, this may take some time. Over the short term, the process may be slowed down by the delayed impact of previous import price increases. Given the present situation, potential second-round effects remain a risk to price stability. Against this backdrop, it is important to proceed with wage moderation.
Andrew Bailey: Capital and lending Article by Mr Andrew Bailey, Deputy Governor of Prudential Regulation and Chief Executive Officer of the Prudential Regulation Authority at the Bank of England, published in the Sunday Times, 5 May 2013. *  *  *  Crises often lead to big changes in public policy. Britain’s decision in the 1990s to embrace the objective of sustained low inflation and an independent central bank had its roots in the horribly high inflation of the 1970s. Now we have a big change in financial regulation rooted in a more recent crisis, the credit crunch of six years ago. Since the start of April, the financial policy committee (FPC) of the Bank of England has had a statutory duty to protect and enhance the stability of the financial system. Alongside it at the Bank is the new Prudential Regulation Authority (PRA). Its job is to promote the safety and soundness of banks, insurers and large investment firms by focusing on the problems they cause for financial stability. This is a new direction for financial regulation. The crises that lead to such big changes often follow long upswings in economic and financial conditions that are allowed to go to excess. Light touch regulation in the run-up to the start of the financial crisis in 2007 supported expansionary growth in the balance sheets of banks – too much borrowing – which was literally too good to be true.

Our new approach is designed to counter the risk that policy is too accommodating in upswings and too harsh in downturns. Two important principles stand out for me: first, that we must carry out financial regulation with an eye on conditions in the real economy, which means promoting stable and sustainable credit creation and growth; and second, we should always be prepared to look to the risks ahead, and exercise sensible judgment. The financial crisis has taught us in the most painful way of the dangers of waiting too long to take action and then being unable to prevent the worst consequences of delay. The FPC has recommended that British banks make sure their capital level is high enough to withstand future threats. Some banks will need to increase their equity capital for a given level of risk in their balance sheets. Concerns have been expressed that this change will harm lending to the UK economy. I do not agree with these concerns. Equity capital is not money that has to be stashed away for a rainy day and thus put to no good use. It is the shareholders’ stake in the company. In nonfinancial companies, shareholder capital or equity is used to finance the acquisition of assets. The same is true for banks. Equity finances the provision of loans to households and companies, and those loans are the banks’ assets. In that sense, capital supports lending by banks and does not substitute for it.
It is also key for French and European sovereignty, and to better channel the additional savings accumulated during the crisis (between EUR 110 billion and EUR 120 billion at end-2020) towards investment in reconstruction. The fact that our financial institutions have insufficient levels of profitability should now be a focus of attention: between 2015 and 2019, the ROE of the main French banks stabilised at an average of around 6%, which is close to the European average but half that of US banks. This will in large part depend on the institutions themselves, on their ability to speed up their adaptation, to digitalise and to innovate, especially in the field of payments: we have two years – no more – to build a European alternative to the Bigtechs. Fintechs – “la French Tech” – are an asset to our financial marketplace and not a threat. But public authorities also have their role to play: stable regulations and taxes in France, at least for 2021, would help. And a prudent return of dividend payments would also be a welcome step, albeit only a first one, towards making them more attractive and increasing their – essential – capacity to raise capital. For banks, we will apply the very prudent decision of the SSM. For insurers, the decision falls to the ACPR and we shall take it by February in as balanced a way as possible, including with regard to the rules adopted elsewhere in the world.

2021, a year of uncertainties, but also one of work, the year of a rebound and even a year of progress: that is all I wish for us, and that I wish to each and every one of you. Happy New Year!
Similar to IOER for banks, ON RRPs provide a risk-free overnight investment directly to a broad range of bank and non-bank counterparties. By reaching financial institutions that are ineligible to earn IOER, an ON RRP facility widens the universe of counterparties that should generally be unwilling to lend at rates below those available from the Fed. Such a facility could also enhance competition in money markets by offering an alternative safe investment and thus  6  Moreover, competition may be imperfect in some money markets currently, allowing spreads to persist longer than they would if markets were more competitive. For example, much money market activity is over-thecounter, potentially leading to search frictions and bargaining. Anecdotal evidence suggests that lenders typically interact directly with a relatively small number of counterparties, perhaps because a portion of the activity is derived from costly relationship lending. Finally, to limit counterparty credit risk, lenders sometimes seek to diversify their lending and apply concentration limits, which are often binding. 7  As I’ll explain, high-frequency variation in balance sheet costs could induce high-frequency changes in the pull of IOER and, in turn, the spread between the IOER and money market rates. We see this transitory dynamic around financial statement reporting dates. On these dates, balance sheet costs for some banks increase, and the fed funds rate and other money market rates fall relative to the IOER rate.

As described  10  In addition to improving competition in money markets, by conducting a daily operation with a known, fixed rate, the Fed can reduce uncertainty and absorb day-to-day variations in the supply of and demand for funds and collateral. An eligible lender that cannot earn the IOER rate and that has an unexpectedly large amount of funds to invest would be able to place the funds in the ON RRP facility rather than sell them in the market at an unusually low rate. This should reduce downward pressure on money market rates. 11  See the discussion in the minutes to the June and July FOMC meetings, http://www.federalreserve.gov/monetarypolicy/fomcminutes20140618.htm and http://federalreserve.gov/monetarypolicy/fomcminutes20140730.htm. 12  See the Survey of Primary Dealers and the Survey of Market Participants  BIS central bankers’ speeches  5  earlier, if the magnetic pull of IOER alone is insufficient, ON RRPs should help to form a floor on rates by providing a risk-free, overnight asset to a broad range of non-bank investors. As a result of these forces, the effective funds rate should generally print within the target range. That said, as the Chair noted during her September press conference, the Committee expects that the effective fed funds rate may vary within the target range and could even move outside of it on occasion. For example, the effective rate could move outside the target for a day or two around key financial reporting dates, such as quarter-ends, when some banks’ marginal balance sheet costs are particularly high.
Prior to the crisis, internal trade imbalances in the euro area had been primarily financed via transactions between country banking sectors. Following the onset of the crisis, the interbank market became fragmented, with a marked reduction in cross-border transactions. It became increasingly clear to the ECB that this impairment in the interbank market interrupted the even transmission of monetary policy across the euro area. The ECB responded by introducing full allotment – we provided as much liquidity as the market required at our main refinancing rate. By statute we only lend against good collateral and so more lending by us means more demand for collateral. The other important monetary policy measure with regards the functioning of the repo markets is the asset purchase programme (APP), and in particular the public sector purchase programme 3/5  BIS central bankers' speeches  (PSPP). It is worth recognising firstly that although the APP has led to a shrinking pool of liquid securities, it has also resulted in a net increase in liquid assets through bank reserves in exchange of inter alia non-HQLA marketable securities. But the APP has clearly reduced the available pool of L1 securities for other investors. To the extent that non-banks seek to maintain their holdings of government securities, this is likely to cause additional pressure on the repo market.

At the same time, the APP is said to have withdrawn increasing volumes of high-quality liquid collateral from the market, exacerbating pricing tensions, especially for special bonds. 1/5  BIS central bankers' speeches  While monetary policy may, in some circumstances, exacerbate repo market tensions, I believe it to be far from the only factor at play today, or indeed the most important one. The situation in the repo market today in fact reflects a confluence of longer-term trends that have affected both the supply and demand for good collateral. I will review some of these trends in a moment. Before doing so, I would like to recall an important point. Our mandate is clear: to deliver price stability. This is our primary objective and the sole orientation for our policy. What we aim to do is to act in a way that is necessary, proportionate and that limits side-effects. This is why we have designed our programmes in such a way as to deliver our objective without creating excessive distortions in market functioning and price discovery. And it is also why we have taken measures to mitigate some effects of our measures on repo markets. These measure, too, are governed by the principle that they must be necessary and proportionate, as well as not being in conflict with our price stability mandate.
As I mentioned earlier, the market is also facing increased competition at the same time as the EU is placing demands for standardisation. This is shrinking the scope for tailor-made national solutions. Changing preferences and expectations among end-customers also puts pressure on financial institutions to change their range of services. The Riksbank therefore has to update its range of services so that the role of central bank money in the settlement of payments between financial institutions is preserved. Otherwise, solutions entailing higher risks for the financial system may appear. According to the Sveriges Riksbank Act, the Riksbank’s task is to promote a safe and efficient payment system. This means finding solutions that are both secure and efficient, and which therefore must be in harmony with technological developments. One reasonable starting point is that the payment infrastructure must be at least as secure and efficient in Sweden as it is abroad. At present, this requires central bank money to be available around the clock, not least if we decide  31 See, for example, Engert, W. and Fung, B. (2017) “Central Bank Digital Currency: Motivations and Implications”. Staff Discussion Paper 2017-16. Bank of Canada and Barrdear, J. and Kumhof, M. (2016) “The macroeconomics of central bank issued digital currencies” Working Paper No. 605. Bank of England. 13 [15]  to launch an e-krona. We can take certain steps in the modernisation of the Swedish payment infrastructure soon, such as, for example, extending opening hours in our own system RIX, which is also our ambition.

Zamani Abdul Ghani: The SME sector in Malaysia Speech by Mr Zamani Abdul Ghani, Deputy Governor of the Central Bank of Malaysia, at the Signing of Strategic Alliance Agreement between Credit Guarantee Corporation Malaysia Berhad (CGC) and Dun and Bradstreet (D&B) Malaysia Sdn Bhd, Kuala Lumpur, 3 July 2007. *  *  *  Yang Berbahagia Datuk Wan Azhar Wan Ahmad Chief Executive Officer Credit Guarantee Corporation Malaysia Berhad Mr. William Lim Wah Liang Group Executive Director Dun & Bradstreet (D&B) Malaysia and Singapore Distinguished guests, Members of the media, Ladies and Gentlemen, Assalammualaikum w.b.t. and Good Morning It gives me great pleasure to be here with you this morning to officiate and witness yet another milestone of progress for the Credit Guarantee Corporation Malaysia Berhad. I would also like to take this opportunity to thank both CGC and Dun & Bradstreet Malaysia Sdn. Bhd. for the invitation to be a part of this significant occasion. The forging of this strategic alliance between CGC and D&B is indeed timely. In the long run, we believe this initiative would bring much benefit to the financial sector and contribute greatly towards the development of the SME sector, especially in enhancing SMEs' access to financing as well as market penetration and awareness on the importance of SMEs. The SME sector has been and shall remain one of the key drivers of the nation's economic growth.
Amidst such challenges, there have been substantial reforms to pension systems in recent years to avoid systemic risks implications to financial stability and fiscal sustainability. Allow me to briefly outline the reforms undertaken by various jurisdictions. One of the most common features of reforms involves raising the age at which eligibility of benefits can occur. For some, especially in European countries, large tax increases were introduced as an alternative to address serious problems of financing pension benefits. In countries with severe demographic challenges, pension benefits were reduced by way of indexing benefits to wages and consumer price indices. Essentially, much of the pension reforms were focussed on reducing fiscal deficits. However, the impact of such reforms has achieved varying degrees of success and in some cases has been noted to have regressive effects. While it is not expected that all countries may make similar choices, striking a balance between maximising returns on pension fund investments and ensuring stable retirement incomes may result in trade-offs that could compromise other developmental needs. For example, poor investment returns on asset classes arising from funded pension schemes may require the Government to secure alternative funds to provide sufficient returns for the workers making such contributions. This could potentially stifle the development of other sectors in the economy. Moving forward, the challenge is to provide sufficient, affordable, sustainable and robust pension schemes.

The full-time employment model does not adequately address the profound changes in employment patterns, which economies are now experiencing, such as the increasing number of women in the workforce. Then again, most pension schemes are also designed for workers with full and uninterrupted careers. This does not reflect the experience of women, as we see more and more today, who may leave their jobs to become full time housewives or homemaker. Breakdown of marriage institutions, which is now not uncommon, and the fact that women typically outlive their husbands, place women at greater risk of being in poverty in old age unless pension schemes are adapted to meet their needs. Pension schemes must also take into account the changing work patterns in economies, which in the recent decade had seen an increase in part-time workers, the self-employed and temporary workers. 2  BIS Review 137/2007  The third challenge is in instilling public awareness on planning for retirement, particularly on having an appropriate level of retirement income to support retirees' healthcare and longterm care. A recent survey conducted in Malaysia revealed that more than 80% of Malaysians are either indifferent or not worried whether or not they have enough money for retirement. Only 34% are consciously saving regularly for retirement and an alarming 60% do not know exactly how much they need during retirement.
They’re unlikely to introduce the same degree of a trade-off between the MPC’s objectives: stronger labour demand narrows the output gap and raises inflation11. And, although it’s possible that these strains too could pass – there’s a chance these frictions are simply the result of the sheer speed of hiring, and will ease of their own accord – there’s also an upside risk to wage costs from currently high inflation. If wage earners’ expectations of future inflation rise in response, of if they seek compensation for the rises in the costs of living that have already occurred, wages could also accelerate further, even without any additional decline in unemployment. The paths of all these things are, of course, extremely uncertain. But that’s always the case, to one degree or another. Precisely because policy decisions take time to work, and because other things can intervene in the meantime, it isn’t possible to control inflation perfectly. What we can do – and what is the best possible approach – is to think at every meeting about the level of interest rates that will maximise our chances, a couple of years from now, of hitting the inflation target exactly. That is what we will continue to do. Thank you. This is a more subtle question than I’ve pretended here. Stronger demand for labour clearly doesn’t introduce a trade-off: it reduces slack and, at the same time, raises inflation. But a deterioration in the supply side of the labour market may do, depending on its nature.

These move around a lot more than those of non-traded goods and services and often have a significant and fairly immediate impact on the CPI. But that impact also tends to dissipate relatively quickly, after a year or so. And it’s for this reason, not because a change in interest rates can’t affect the supply of oil (obviously), that the orthodox response of monetary policy to a change in oil  Volatility measured as standard deviation over the sample (annual data 2001-21). Persistence measured as the lagged coefficient of a first-order auto-regressive model. Sources: ONS and Bank calculations. prices is in the first instance to look through it. By the time policy could really do anything to offset such a rise, allowing for the delay between action and effect, the direct impact on inflation would largely have disappeared. It’s in this context that, referring to the current surge in tradable goods prices, several policy makers have used the word “transitory”. By that they do not mean (and never meant) that these effects will be gone in one, two or even twelve months. As we saw at the start, thanks to the protracted way in which developments in wholesale markets feed through to the Ofgem cap, the recent jump in wholesale gas prices will directly 4  My predecessor Charlie Bean explained this point very clearly in a talk in Jackson Hole in 2006. 6  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  6  boost CPI inflation in the UK for twelve months.