samchain/econo-pairs-v1 huggingface dataset:
Loans to companies via the banks are another possibility that I have already mentioned. In addition, the Riksbank is prepared to carry out currency interventions if the exchange rate develops in a way that is not compatible with a rise in inflation to two per cent. The aim of this would not be to influence the long-run krona rate, but to counteract an overly rapid strengthening before inflation has stabilised around 2 per cent. I hope that my comments so far have made clear that confidence in the inflation target has been given the highest priority by the Riksbank and that monetary policy has contributed towards the favourable development of the real economy. At the same time, since 2012, we have been careful to point out that a situation with low interest rates over a long period of time may create imbalances on the financial markets and on the housing market. We have therefore clearly communicated to the Government and other authorities that it is important to use various measures to limit risk-taking in the economy. My assessment so far is that significantly  5  De Rezende, R. B., Kjellberg, D. and Tysklind, O., “Effects of the Riksbank’s government bond purchases on financial prices”, Economic Commentary no. 13, 2015, Sveriges Riksbank. 6  BIS central bankers’ speeches  more commitment will be required to obtain a functioning housing market in Sweden and to reduce the risks of household indebtedness.

A cautious combination of a negative repo rate and bond purchases So how have we chosen to act, and what have the results been, so far? Up to this point, we have kept to changes to the repo rate and repo rate path, and purchases of government bonds. As it has not been completely certain how these would function in practice, there has been reason to proceed cautiously. We have combined several measures over the past year to make the combined effect sufficiently great. Over a number of stages, we have cut the repo rate and/or the repo rate path, at the same time as we have announced and initiated bond purchases in amounts that have been increased in several stages (see Figure 4 and Figure 5). In addition, in our communication, we have emphasised our preparedness, if necessary, to also rapidly increase monetary policy stimulus between the ordinary monetary policy meetings held every second month. In March 2015, we did exactly this – we took a decision on new monetary policy stimulus between two ordinary meetings. The repo rate cuts have largely worked As regards the repo rate cuts, so far we have been able to observe that lending rates followed to a normal extent, while deposit rates have stopped at zero for everybody except some larger companies.
For most, though, this is not a question of whether to integrate, but of how to do so. And the success of this process will depend in part on the ability of central banks to conduct monetary policy in a manner consistent with achieving low inflation. This constellation of exchange rate and monetary policy regimes among emerging market economies, including the major oil exporters, has broader consequences for the world economy as a whole. Insufficiently flexible exchange rate regimes have the potential to alter the pattern of capital flows and the price of financial assets. So do the increase in the mobility of saving and investment; the increase in the desired exposure to foreign assets (the reduction in home bias); the financial market innovation that allows for better diversification and risk sharing; and the differentials in the pace of technology adoption or workplace practices that give rise to varying productivity trends across countries. These all contribute to the patterns of capital flows and imbalances that we observe in the world today, and it is very hard to disentangle their effects from those of exchange rate and monetary policy arrangements. That some of the forces governing capital flows and asset values are driven not by market-determined expected return but by policy measures directed at, for example, an exchange rate objective means that at least some of what we observe in global capital markets may be attributed to these distortions.

It is important that this critical issue be well understood. The public must be absolutely confident that the Fed can meet its monetary policy objectives of low and stable inflation and sustainable economic growth. Before I begin to get into these issues in earnest, let me note that, as always, the views I put forward today are my own and do not necessarily reflect the position of the Federal Open Market Committee (FOMC) or the Federal Reserve System. Turning first to the outlook, the economic contraction appears to be waning and it seems likely that we will see moderate growth in the second half of the year. The economy should be boosted by three factors: 1) a modest recovery in housing activity and motor vehicle sales; 2) the impact of the fiscal stimulus on domestic demand; and 3) a sharp swing in the pace of inventory investment. In fact, if the inventory swing were concentrated in a particular quarter, we could see fairly rapid growth for a brief period. Regardless of the precise timing, there are a number of factors which suggest that the pace of recovery will be considerably slower than usual. In particular, I expect that consumption – which accounts for about 70 percent of gross domestic product – is likely to grow slowly for three reasons. First, real income growth will probably be weak by historical standards.
I believe that we should make an overall assessment on the basis of several measures but otherwise I lack space in this speech to go into further detail on this important subject. For a review of different methods of measuring resource utilisation I refer to Svante Öberg’s speech “Potential GDP, resource utilisation and monetary policy” of 7 October 2010. 2  BIS central bankers’ speeches  The world is a big place… To start with, the rest of the world is a big place and we do not have the resources to produce detailed forecasts for individual countries in the same way as we do for Sweden. Instead we have to limit the number of forecast variables and focus on those parts of the world that are most significant to the Swedish economy. For other regions we have to rely to a great extent on the assessments of other forecasters, although this of course does not mean that we copy their forecasts directly. Another important aspect is that the forecasts for the different regions of the world must hang together in a consistent way. If, for example, we change the forecast for the United States then this also affects the forecast for the euro area (and other regions) and vice versa. This mutual interdependence is not always easy to manage but the preconditions have improved recently following the introduction of a new model for the international outlook.

It goes without saying that it is difficult to assess where you are going if you do not know where you are today. Assessing the current situation thus lies at the very core of all forecasting. Such an assessment does not simply entail producing forecasts for outcome data like GDP and the CPI, it also involves having to assess demand and supply factors in the economy. In this context the assessment of resource utilisation plays a prominent role. If resource utilisation is low then the economy can grow rather rapidly without prices and wages increasing in an alarming way. If it is strained then high growth may lead to overheating tendencies that could be reflected in excessively high inflation. So, even if the Riksbank produces fair forecasts of economic growth monetary policy may be less well-balanced if we misjudge resource utilisation. A complicating circumstance in this context is that resource utilisation, unlike GDP growth, cannot be observed directly. This underlines the fact that the assessment of the current situation is fundamentally an assessment of the state of the economy that is very difficult to make. Confidence indicators, which capture the mood of the economy, play an important role in the assessment. High values in the confidence indicators normally entail relatively strong growth in consumption, exports and investment, all else being equal. Important confidence indicators include the purchasing managers’ index, data from various business tendency surveys and surveys on expectations relating to wages and prices, but there are many more.
For the SEEU countries data are available only on Croatia and Macedonia, from the IMF International Financial Statistics. Cumulatively, in this period in Croatia there was real appreciation of 9.1%, while in Macedonia there was real depreciation of 18.2%. 9  Source: EBRD Transition report 2007: November update and NBRM calculations. Data for 2007 are estimates. BIS Review 74/2008  3  due to lower competitiveness and higher consumption, is one of the main causes for the current account deficits, some of these countries are also experiencing deficits in the income balance, which mainly reflects repatriation of profits from foreign direct investments. Most certainly, such high current account deficits would not have been possible if there were not such large and continuous capital inflows in transition countries, mainly in terms of FDI, but also of portfolio and other types of investments. For example, in the period 1989-2007, total FDI amounted to around 3,600 USD per capita in the new EU member states and around 2,000 USD per capita in the SEEU countries. 10 Again, in the earlier years of transition, capital flows partially substituted for the insufficient savings in these countries and allowed for the necessary transfer of technology and expansion of production. However, there are concerns that, in the recent years, and particularly in the countries with fixed exchange rates, capital inflows are dangerously adding to domestic demand, thus putting further pressure on inflation and increasing imports.

In addition, there were huge quality improvements in products and services, which also contributed to price rises. Last but not least, as these countries were establishing functional market economies, they had to allow for market rather than administrative determination of prices. As prices were previously kept artificially low, these changes caused additional inflationary pressures. The implementation of structural reforms that are prerequisite for real convergence, also creates pressures on the fiscal policy, i.e. the budget deficit and consequently inflation. Part of the costs for the economic reforms are financed from EU pre-accession funds, whose utilization, although it does not imply direct increase of the budget deficit and jeopardizing one of the nominal Maastricht criteria, still could have a significant liquidity effect, creating inflationary pressures. The combined effect of the of these factors on the supply side and on the demand side, is reflected in the relatively high inflation in these countries, the average annual rate of which in the period 1993-2007 in the countries of Central and Eastern Europe ranged from 6% in the Czech Republic to 38.6% in Lithuania. (By mid-90s, in South Eastern Europe, and in Bulgaria and Romania, there were frequent instances of extremely high inflation. In this group, in the period 1998-2007, the average annual inflation rate ranged from 2.1% in Macedonia to 31.1% in Serbia). 7 Such movements caused appreciation of the real exchange rate, which was especially emphasized in the new member states.
As shown in Panel 10, market participants assign about one chance in four to such a scenario unfolding, so communications about how the FOMC might respond to such an outcome in the future might have the effect of bolstering confidence even today. 12 / 15  BIS central bankers' speeches  Returning to Panel 9, it is notable how much uncertainty there is about the size of the balance sheet, even in the no-zero-lower-bound scenario shown on the left. This likely reflects a few factors: MBS repayments remain uncertain up to the cap; future demand for currency, bank reserves, and non-reserve liabilities is hard to know precisely; and the FOMC has not yet decided on a longer-run framework for the implementation of policy. As a result, it seems appropriate to me that there should be an appreciable amount of uncertainty, which should decline over time as these matters become clearer so long as normalization continues uninterrupted. Conclusion Let me conclude now by reiterating the message of confidence with which I began my remarks. I am confident that the FOMC’s gradual and predictable plan to normalize the balance sheet will reduce the balance sheet’s size at an appropriate pace, that it will promote good market functioning, that it will not disrupt the mortgage market or Treasury debt issuance, and, importantly, that it will mitigate the risk of sharp or outsized asset price reactions.

It seems likely that these shifts in expectations came as the FOMC’s communications became increasingly granular, particularly after the June meeting at which the FOMC provided detail on its balance sheet normalization plan. On net, it seems likely that expectations for the Federal Reserve’s overall stock of asset holdings were fairly stable over this time, despite variation in expectations for the timing and pace of eventual declines. Under the “stock view,” this stability in expected future asset holdings should result in limited changes in asset prices, as has been observed. Of course, as the balance sheet shrinks, some upward pressure on rates should be realized. Market participants’ estimate of this effect over two years is shown in Panel 8. 11 / 15  BIS central bankers' speeches  One last possible explanation for the stability of longer-term interest rates amid the movement toward balance sheet normalization has been the FOMC’s clear message that it would be prepared to use its full range of tools, including altering the size and composition of its balance sheet, if future economic conditions were to warrant a more accommodative monetary policy than can be achieved solely by reducing the federal funds rate. Panel 9 shows the average of survey respondents’ probability distributions for the balance sheet; the left side shows this for the scenario where overnight rates remain away from zero, and the right side shows the adverse scenario in which they do return to zero. The right side shows a significant expansion in the balance sheet.
Muhammad bin Ibrahim: ASEAN’s rapid economic growth and future potential Opening address by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the ASEAN Fixed Income Summit (AFIS), Kuala Lumpur, 29 September 2014. *  *  *  I am pleased to be here at the inaugural ASEAN Fixed Income Summit, which is hosted by Bank Negara Malaysia, together with Cagamas, the ACI – Financial Markets Association of Malaysia and Malaysian Association of Corporate Treasurers. We have here today, an impressive gathering of senior policy makers across ASEAN and senior representatives from major financial institutions and corporations operating in the region. I would like to welcome all of you to Sasana Kijang, Kuala Lumpur and to Malaysia. Today, we are in one of the most dynamic and fastest-growing regions in the world. Based on IMF’s forecast, world growth in 2014 and 2015 would be 3.4% and 4% respectively. The ASEAN region is expected to grow by 6.4% in 2014 and 2015. ASEAN’s GDP is expected to reach USD3 trillion by 2017, tripling in size relative to a decade ago. With a diverse range of economies in terms of size, stages of development and economic structure, including home to many dynamic and emerging economies such as Myanmar and Vietnam, economic expansion in this region are expected to be sustained, and significantly outpace global growth. As ASEAN continues to open up to global investors, foreign direct investment flows (FDI) is expected to accelerate.

For many years, the Bank operated several times a day in  BIS Review 61/2006  1  the money markets, but that hyperactive approach did not succeed in stabilising the overnight interest rate which remained more volatile than in most other advanced countries. It was important to move to a simpler system in order to reduce that volatility, and the new system of money market operations, which was introduced last month, has done precisely that. The Bank now deals in the markets only once a week. Almost all banks and building societies now have access to the Bank. And they no longer have to balance their books with us at the close of business every day, but instead must achieve a target balance with us on average over the month running between MPC meetings. For the first time in its history, the Bank pays interest on reserve balances held by the commercial banks with us. The rate paid by the Bank on those reserve balances is the rate set by the MPC - Bank Rate is back. Great credit is due to the teams led by Andrew Bailey and Paul Tucker who together managed the introduction of the new system, proving that, as Cameron Cobbold remarked in 1958, “the Bank is a bank, not a study group”. The 1997 reforms also changed the rules of the game for communication between the Bank and financial markets, and I would like to say a word about what they are.
The discovery of resources on the shores of the Continent should be carefully handled so that the funds that are realised as much as possible are used in the development of the African continent. Exploitation of the natural resources by foreign investors should ideally involve value addition on the continent. This is one way through which Africa would benefit from its rich resource base. 4  BIS Review 126/2009  Conclusion The challenges of mobilizing domestic resources for the medium-to-long term development require higher levels of domestic resource mobilization. Africa needs a paradigm shift in terms of sources of development finance. This is because the resources that it has domestically in terms of official international reserves and pension funds can be used to finance infrastructural development and investments in other productive sectors of the economy. Capital markets can also be a source of finance for private and public sector investment projects. Africa needs to maintain the sound macroeconomic policies which led to the positive growth that the continent has witnessed in the last decade, and continue with policy reforms aimed at reducing the cost of doing business. This is the best way to ensure that domestic resources as well as foreign resources have a positive and long lasting impact on the African continent’s economic growth and poverty reduction outcomes. BIS Review 126/2009  5

But this is not the case at present, as banking activity levels are still low, and precisely this is the second source of pressure on the income statement. The third one is the significant volume of non-productive assets (NPLs and foreclosures) remaining on banks’ balance sheets although, as I mentioned earlier, the data shows a positive trend with a significant decline over the last two years. In a period of far-reaching changes in the banking sector, it is important for banks to improve their efficiency, so as to remain viable competitors. Banks could do this through various means, for example redesigning their networks, redefining their capacity and efficiency, enhancing their geographical diversification, and increasing specialization in certain market segments. From this perspective, a number of analysts and market participants expect a greater degree of consolidation in the Spanish banking sector. The start-up of the Single Supervisory Mechanism and the gradual disappearance of barriers against banking integration at the European level facilitate a new operational framework for banks, when defining their strategies through the Eurozone and the area covered by the Single Supervisory Mechanism. 4  BIS central bankers’ speeches  Conclusions: growth perspectives Now, to conclude: According to most analysts, public and private alike, the Spanish economy is expected to continue growing at sustained rates in the medium term. In particular, GDP might increase at a rate around 2.8% in 2016 according to the consensus. This figure is well above the estimated rate for the euro area average.
We expect the fall in commodity prices, which is driven by the weak global demand, to bring consumer inflation down, and the awaited moderate pace of domestic demand to restrain the upside risks. Thus, we believe that underlying inflation will move downward in the forthcoming period. Distinguished Guests, Now, I would like to give a brief account of developments in economic activity and the shortterm outlook on which the inflation forecasts are based. According to the GDP data of the second quarter of 2014, economic activity was relatively weaker compared to the outlook we presented in the July Inflation Report. In the second quarter, we saw that industrial production remained virtually unchanged quarter-on-quarter, while national income posted a decline after eight quarters in seasonally adjusted terms (Chart 13). This decline was mostly attributed to the agricultural sector, which made a 0.3 point negative contribution to quarterly growth. Therefore, national income growth lagged behind industrial production growth (Chart 14). 6  BIS central bankers’ speeches  Industrial production, which grew by 1.1 percent in the July-August period of 2014 compared to the preceding quarter, contributed to growth in the third quarter. On the other hand, we may see some decline in the agricultural value added. Thus, there are signals that GDP growth may fall short of the industrial production growth in this period as well. Factors like the slowdown in the European economic growth and geopolitical developments led the external demand to decelerate, inducing a marked slowdown in the growth of exports excluding gold (Chart 15).

The effect of the expansionary monetary policy on capital incomes, via rising equity prices, should therefore have led to a more unequal income distribution. However, capital income is only one part of households’ total income; the largest part is comprised of labour income. As with capital income an expansionary monetary policy can affect the labour income of different households in different ways. For some households the hourly wage may be what primarily determines their income development, while for others the number of hours worked is the most important thing – and above all  6 Lundberg and Waldenström (2016). See also Waldenström (2016). 7 Sveriges Riksbank (2011), Swedish Fiscal Policy Council (2013) and SoU 2013:78. 9 [14]  whether or not one actually has a job. As monetary policy affects these quantities in different ways, income distribution will also be affected. In Sweden, it is primarily the differences between the income of those who have a job and those who do not that is important to the income distribution, rather than the wage differences between those who work. 8 This is clearly visible in the dispersion of disposable income, that is, income including work and capital income, as well as various transfers and after taxes are deducted. The higher the disposable income, the less common it is that one’s main source of support is from something other than labour and capital.