samchain/econo-pairs-v1 huggingface dataset:
Inflation is high and broadly based When my predecessor Øystein Olsen spoke here a year ago, Norges Bank had just begun to normalise the policy rate. During the pandemic, the policy rate had been lowered to a historically low level. When society reopened, demand picked up quickly, and already last summer, activity  returned to its pre-pandemic level. There was no longer a need for a highly accommodative monetary policy. At the same time, the evolution of the pandemic was still uncertain. We therefore expected to gradually raise the policy rate further. In late spring 2021, the rise in prices for commodities and other globally traded goods accelerated. The pandemic-related lockdowns had led to a shift in consumption, both in Norway and other countries. There was a rotation away from spending on services to goods, and global goods demand increased. High demand, coupled with pandemic-induced delivery delays, led to substantial global supply chain constraints, with long delivery times and high freight rates. Chart: Sharp rise in global prices It took some time for the rise in global prices to feed through to Norwegian consumer prices. This is because at the same time the effect of the pandemic-related krone depreciation was fading out. But since summer, imported inflation has been high. Over the past year, employment in Norway has risen further, and unemployment has come down to a very low level. In the period to summer, labour shortages became a growing concern for firms. Over the past few years, wage growth has edged higher.

The “philosophy of resolution” is rooted in those rough times; we do not want to live again under the threat of “too big to fail”, and without living wills. EU lawmakers and regulators quickly learned the lessons. Beyond the crisis management regulation (BRRD and CRR), the Banking Union launched in 2014 is in its own way an illustration of Clausewitz’s military theory. It has strategic objectives (or Ziele in German) – establishing a stable, safe, and reliable banking sector, but also offering the right conditions for the emergence of panEuropean groups. It also set political goals (Zwecke) through its three pillars. And lately, it has directed its efforts (Schwerpunkt) mainly – and maybe excessively – towards the third pillar EDIS (European Deposit Insurance Scheme). Today we should turn our main efforts to enhancing implementation of resolution, in order to make it even more efficient. Although it is less frequently  Page 2 sur 5 commented on, let me stress that resolution is just as important as supervision. It echoes that famous Latin phrase: si vis pacem, para bellum (if you want peace, prepare for war). That goes without saying, but for the sake of clarity, do not take this military metaphor literally: we are not warmongers of any kind. However, decision-makers in charge of resolution, like generals, need to act within a very short timeframe –typically a weekend – in order to find the right solutions to complex emergency situations. Resolution authorities need to be on a war footing at all times.
If there is no evidence of misalignment, and the issue is simply about hoarding reserves, the probability of the intervention having any effects on the exchange rate is smaller, while the possibility of incurring in quasi-fiscal costs increases. The Chilean experience last year was in line with the aforesaid principles. It was done in a moment where there was clear evidence of misalignment with respect to the levels consistent with long-term fundamentals. It was also totally consistent with the inflation objective, and started at a moment – April 2008 – in which there were rather benign inflation figures that revealed a smaller risk of unwanted inflationary propagation. Towards midyear it was even possible to raise the interest rate substantially to tackle an inflation rate that was much deviated from the target. This was thanks to the fact that the purchase of dollars was being carried out mechanically and despite a significantly depreciated exchange rate after the intervention. The purchase of foreign currency was concluded prematurely due to global tensions in global liquidity in dollars in September of last year. The capacity of the Chilean economy to subsequently deal with a significant exchange rate depreciation scenario, with monetary easing prospects and reduced inflationary pressures is proof that there was no inconsistency between the decision to intervene and the conduct of monetary policy (Figure 4). Intervention can occur only under special circumstances, because it is not easy to assess whether the prices of domestic assets are really in a bubble.

First I want to refer to the origin of this financial crisis and its linkage with monetary policy. Some arguments point out that the current crisis was originated by monetary policy mistakes, particularly in the United States, where low interest rates are blamed for the housing bubble and subsequent financial meltdown. Some have even claimed that inflation targeting regimes are inadequate, because monetary policy should also aim at controlling asset price inflation. And this is precisely the second point in my presentation, that is, whether interest rates should react to asset price movements or not, and what is the role played by the exchange rate. BIS Review 68/2009  1  To sum up, and insisting on a point I have made before, there are many cases of countries that lowered their interest rates substantially without triggering any housing bubbles. There are also cases of countries with very low interest rates where home prices soared, but still their financial systems did not end up in a financial disaster like they did in some developed economies. This crisis, or at least the magnitude it has reached, is the result of financial fragility and we, in Latin America, are well aware that when a cyclical downturn is combined with a financial crisis, the impact is magnified. Central banks generally have two objectives: price-level stability and financial stability. Recent history reminds us that we cannot pursue both with one single instrument, the interest rate.
We have therefore issued advice to the banks on the steps that they need to take, such as: review of business strategies and business processes that might be affected by the Euro; review of nostro accounts in the legacy currencies; adaptation of information systems; and review of contracts that might be affected by introduction of the euro. Secondly, we have thought it sensible to introduce legislation that will provide for continuity of contracts in relation to the introduction of the euro. In doing so, we are following the example of the EU itself as well as some other jurisdictions. In theory, such legislation may be unnecessary since the well-established “lex monetae” or “law of the currency” principle means that the currency of a payment obligation should be determined by the law of the country of that currency. This means for example that a payment obligation payable in French francs would become payable in euros after the introduction of the euro because that is the situation that applies under the law of France. However, despite this general principle, concerns have been expressed that parties to contracts might argue that the introduction of the euro represented a fundamental change of circumstances, bringing the contract to an end or requiring its terms to be adjusted. In addition, another feature of the introduction of the euro is that it will replace the ECU at a rate of one for one on 1 January 1999. The ECU is a currency basket but not a currency in its own right.

His belief, with justifiable pride in the Foundation, was that there was no more important contribution the Fed could make and no more competent institution engaged in this effort than the Foundation. Fortunately for the New York Fed, we have a long and productive collaboration with the Foundation. We provide support on curriculum design and professional development. We are working together to help create a new high school in the city with a finance theme. The NAF has adopted the Fed Challenge for its Academies throughout the country. And we benefit in turn by using the Academy’s work as a model for the economic and financial programs we support and initiate. If you care about the economic future of America, you have to care about educational reform and the mission of the NAF. This mission has always been important, but it is particularly important today. Confidence in America depends importantly on success in the education mission. Improving educational achievement will play a critical role in generating the innovations necessary to drive future productivity growth. And yet, US students remain math challenged, and we are awarding a diminishing share of the world’s PHDs in science and engineering. Improving the quality of education is vital to improving the capacity of our citizens to manage the challenges that come from global competition, rapid technological change, and the greater share of the risk they now bear for saving for retirement.
The information available to date suggests that such cost sharing across firms and workers is already taking place on a tacit basis. Specifically, in the collective bargaining agreements registered to March the wage increases for 2022 stood at 2.4%, well below the recent increase in consumer prices and that expected for 2022 as a whole. Therefore, in practice workers are losing purchasing power. That said, in large part, this increase essentially reflects the deals struck by the social partners in the multi-year collective bargaining agreements negotiated over the past two years in an inflationary setting that bears little resemblance to the current one. There are therefore signs that this stabilisation mechanism is running out of road. With this in mind, I believe that concrete action is needed. Similarly, in the case of businesses, recent data reveals that they have not fully passed on their rising costs to their customers, and their margins are therefore likely to have been squeezed. This can be inferred, for instance, from the feedback from Spanish firms  in the latest edition of the EBAE for the first quarter of 2022. According to the survey, around 82% of businesses saw their costs rise as a result of higher input prices, whereas just over 40% raised their selling prices. Second, the asymmetric impact of the current shocks on workers, firms and sectors must be borne in mind when determining the specific features of the incomes agreement.

BIS Review 41/2010  3  As for dealing with consequences of capital inflows, we see the current managed float exchange rate regime as appropriate and beneficial to the Thai economy. We will continue to let the level of exchange rate be determined by market forces, but make sure that it is not too volatile to the extent that it will be too difficult for the private sector to adjust to. And to give the private sector greater flexibility to manage foreign exchange risks, last month we further relaxed restrictions on Thai direct investment abroad and on the unwinding of foreign exchange hedges. These moves, which are parts of our ongoing capital account liberalization plan, will also make our capital flows situation more balanced, by facilitating two-way foreign exchange flows. On the fiscal front, you will agree that fiscal policy is one of the key instruments to support the economy during the difficult times when private sector growth engines have been impaired. However, the stimulus packages that the government announced last year, have been done on the assumption that Thailand will face the most severe global recession in the last 60 years. But as it turned out, the global crisis was not as severe as thought. Given that our economy is on the robust recovery path, the need for stimulus may be less. And the government should also find the way to normalize the fiscal policy stance at an appropriate time.
BIS Review 23/2009  7  Lending to Swedish banks 500000  SEK, against commercial paper  500000  450000  USD  450000  SEK  400000  400000  350000  350000  300000  300000  250000  250000  200000  200000  150000  150000  100000  100000  50000  50000  0 okt-08 oct-08  0 nov-08  dec-08  jan-09  feb-09  Source: the Riksbank  Acting in different ways under different circumstances  Extraordinary events often require  extraordinary measures  Other ” tools”  Greater speed, flexibility and force  Decisions – what information do you have and what do you foresee ahead? A metaphor…  8  BIS Review 23/2009  Foto: Fredrik Edin, Cykloteket Racing Team  Reduced spread between mortgage rate and repo rate but risk premium for longer maturities still higher than normal Percentage points  M PR09:1  3.5  3.5 Difference between mortgage rates (5 year) and government bond (5 year) Difference between 3-month mortgage rates and the repo rate  3.0  3.0  2.5  2.5  2.0  2.0  1.5  1.5  1.0  1.0  0.5  0.5  0.0  0.0  Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09  Note. M ortgage rates refer to average listed rates.

This is largely connected to the substantial changes in the repo rate in our forecast. Our inflation target is formulated in terms of the change in the CPI, and I would therefore like to pause and develop this a little further. CPI inflation has fallen rapidly in recent months and we are assuming that this will continue during 2009. The annual change in the CPI is expected to be at its lowest in September this year, when it will be -1.6 per cent. This fall is largely due to the rapid interest rate cuts we have made during the autumn and now in February having an impact on the part of the CPI that reflects housing costs. It is also due to the fall in energy prices. However, if one disregards the cost of mortgage rates the picture is quite different. Inflation measured in terms of the CPIF, which disregards changes in mortgage rates, is around 1.6 per cent on average in 2009. And if one moreover disregards the change in energy costs from the CPIF the forecast is even higher. According to our assessment, the CPIF excluding energy will increase on average by just over 2.2 per cent a year. There are several reasons why underlying inflation trend is being held up. Unit labour costs have increased fairly rapidly over the past two years and resource utilisation has been high. In addition, the krona has been weaker, which contributes to higher import prices.
Capital spending since then has been somewhat higher, but the marginal return from investment in existing fields has been declining, while the costs of tapping new sources of supply, such as Canadian oil sands and deep water fields, are relatively high. The bottom line is that while agricultural prices may fall back a little this year, oil (and also metals) prices are more likely to remain elevated. And there must be a risk that continued turmoil in the Middle East and North Africa results in a substantial oil price spike, present OPEC spare capacity notwithstanding. Looking even further ahead, there may continue to be general upward pressure on the prices of exhaustible resources as demand from the emerging markets continues to grow. As a net commodity importer, such an adverse development in the terms of trade between commodities and final goods and services would represent yet another headwind for the United Kingdom. The second factor behind the current elevated level of inflation is the substantial depreciation of sterling during the crisis – as noted earlier, down almost a quarter from pre-crisis levels (Chart 6). That fall occurred in two legs: a general drift down over the first year of the crisis, and a second, sharper, fall during the peak of the crisis immediately following the collapse of Lehman Brothers. Since early 2009, the effective exchange rate for sterling has, though, been pretty stable.

But the risk of inflation staying above the target into the medium term needs to be weighed against the downside risk to growth and the prospect of a persistent margin of unused resources in the economy. Allowing inflation to come back gradually towards the target would allow the margin of spare capacity to close more rapidly, and would be in line with our remit that tells us that temporary deviations of inflation from the target are permissible if they help to avoid excessive volatility in output. I hope my remarks today have given you some insight into the issues that the MPC is presently grappling with. You will be aware that the spread of opinion on the Committee is unusually wide right now. That is in large measure a reflection of the substantial challenges and uncertainties facing the UK economy at the current juncture. Indeed, given the extreme nature of recent events, it would be surprising if the Committee were entirely at one in its assessment of the outlook and its judgement of the appropriate policy response. But the Committee is united in its objective of meeting its inflation mandate in the medium term and playing its part in restoring the economy to a high and stable level of activity. Thank you!
We would like this debt restructuring to have the following five characteristics: to be longer in nature; to be broader and applied to a wider range of people; but at the same time, to be more targeted and flexible, respond more appropriately to different circumstances faced by different kinds of borrowers. This is because the nature of the recovery is somewhat uneven and the crisis has hit different sectors in a very uneven fashion. We would like to make sure that these debt restructuring measures would benefit as Page 5 of 9  many people as possible in order to survive and get through the crisis together. The more debtors that survive, the better off the creditors will be. Lastly and most importantly, we would like to make sure that debt restructuring measures that are undertaken do not exacerbate problems of moral hazard, in which we undertake measures in trying to alleviate the crisis that end up contributing to the moral hazard problem as the saying goes the cure being worse than the disease. That is something we would be very cognizant of in implementing these new measures. What about the longer term? In addition to making sure that we get through this crisis, we, at the Bank of Thailand, are trying to make sure that we put in place the foundations for a longer and lasting recovery beyond COVID and making sure that we are in a good position to take advantage of the opportunities that will arise in the post-COVID world.

The Norwegian krone market is less liquid than many other foreign exchange markets. This may have contributed to amplifying the appreciation of the Norwegian krone. The krone exchange rate has appreciated during the autumn. Expectations that the interest rate has reached a trough, in conjunction with high spot and futures prices for oil, have probably supported the krone. Our previous experience suggests that the value of the Norwegian krone is primarily affected when oil prices are unusually low and/or falling. Through 2004, the krone exchange rate has appreciated in line with oil prices. Oil prices have not, however, been as high, in nominal or real terms,  2  BIS Review 67/2004  in since the krone was floated in late 1992. We have therefore no previous experience to draw on. It appears that the krone exchange rate also reacts to abrupt upward movements in spot and futures prices for oil. Oil prices have declined somewhat since end-October. A levelling off or a fall in oil prices and a stable use of petroleum revenues could reverse the short-term capital flows. The strong krone has a dampening effect on the inflation outlook. This provides a basis for keeping the interest rate level in Norway low for a longer period than would otherwise have been the case and for maintaining this low level even though interest rates rise in other countries. Inflation targeting will therefore ease the pressure on the krone and stabilise exchange rate expectations. Inflation has been low this year.
Paul Fisher: An unconventional journey – the Bank of England’s asset purchase programme Speech by Mr Paul Fisher, Executive Director for Markets and Member of the Monetary Policy Committee of the Bank of England, based on a presentation to contacts of the Bank’s Agency for the South-West, Stonehouse, Gloucestershire, 11 October 2010. *  *  *  In March 2009 the Bank of England’s Monetary Policy Committee (the MPC) embarked on an “unconventional” journey. Having cut Bank Rate to an historic all-time low of just half of one per cent, the MPC initiated a programme of asset purchases financed by the issuance of central bank reserves – commonly known as “Quantitative Easing” or QE. 1 To date the Bank, in line with MPC decisions, has bought £ of assets, equivalent to some 14% of UK annual nominal GDP. In this talk, I would like to briefly recap on why we started the QE programme and how well it has worked. I then want to explain some of the details behind why it was done the way it was and some technical details on what we plan going forward. Let me be clear upfront that the purpose of this is to share some of our broader thinking about the asset purchase programme, not to drop any hints about the future direction of monetary policy.

If refinancing activity declines, leading to a decrease in gross issuance, our purchases could exceed these levels. Of course, the pace of asset purchases is not strictly limited by the amount of new mortgage origination, as market participants can also deliver older securities into TBA contracts. As the pace of MBS issuance evolves, the Desk will continue to watch the market functioning indicators discussed above, with a particular emphasis on the market’s ability to settle further purchases. Conclusion Overall, I believe the Desk has effectively and efficiently carried out the FOMC’s directive to purchase additional Treasury securities and agency MBS in a transparent fashion that achieves the FOMC’s policy objectives, supports orderly market functioning, and obtains competitive market prices. I also believe that the Federal Reserve’s balance sheet policies have been effective in easing financial conditions, particularly with respect to making historically low borrowing costs available to existing and prospective American homeowners, as well as lowering interest rates to spur business investment and household spending. To achieve our policy mandate, we rely on your continued ongoing and active participation in our operations both for your own accounts and for the accounts of your customers, consistent with your role as primary dealers. We will continue to implement the FOMC’s  12  The Desk also purchases dollar roll contracts when implied financing rates are sufficiently positive. Such operations occurred in December 2011. 13  See TMPG Best Practices.