samchain/econo-pairs-v1 huggingface dataset:
4  BIS central bankers’ speeches  The second concern remains, however. In sum, my primary concern about rising energy prices is not so much that they will lead to higher inflation, but that they will subtract from household income and thus weaken the economy. Financial markets are also not expecting sharply higher rates of inflation. The difference between the 10 year Treasury rate and the 10 year inflation-protected Treasury security (TIPS) rate provides a measure of the expected average inflation rate over the next decade. As shown in Figure 16, the average expected inflation rate by this measure is still below what the markets expected prior to the recession and the necessary expansion of the Fed’s balance sheet. Concluding observations Thankfully, we are seeing signs that the economy is experiencing a more self-sustaining recovery. However, it is important not to lose sight of how much excess capacity remains. It is likely to take at least four years to return to full employment from the current unemployment rate of 9.4 percent. It is also likely that measures of core inflation will remain well below 2 percent over the same period. This suggests that the signs of improvement we have seen so far are not worrisome, but are most welcome. A sustained period of the economy growing well above its potential – not just for a few quarters – is exactly what we need. The current level of accommodation from monetary and fiscal policy is appropriate.

As Figure 3 shows, in the current recovery, growth in consumption has been much slower than in the 1982 recovery and has, unfortunately, tracked the anemic initial recovery from the 2001 recession. While the 2001 recession damaged many a household’s finances, through an abrupt decline in stock-market wealth, the current recovery has been hampered by households trying to rebuild their finances given sharply diminished housing wealth in addition to declines in the value of their other investments. While there have been concerns about business fixed investment, Figure 4 shows that this component of GDP has grown quite well relative to the last two recoveries – although somewhat slower than the 1982 recovery. Despite the concern over economic uncertainty voiced by many businesses, investment has been growing. The real laggard in this recovery has been housing. While housing is a relatively small component of GDP, it can be quite volatile – and often grows rapidly during an economic recovery. In addition, purchases of appliances, home furnishings, and housing-related services are impacted by slowed housing activity. Given the problems that flow from the bursting of the housing bubble, Figure 5 shows that residential fixed investment is roughly where it was at the trough of the recession – and thus not providing its more usual contribution to growth in the early stages of a recovery. Just how moribund the housing market has been is shown in Figure 6. Both housing starts and building permits have leveled off, but are showing no signs of a significant recovery yet.
Although each case is, in some sense, unique, and international experiences are not easily transferable, its analysis provides some useful background to understand the Chilean case. The first is to confirm the exceptional nature of the Chilean experience, due to its size and speed. In addition, given the factors that motivate migration— particularly from Venezuela—one can think that it will not be reversed any time soon. Secondly, recent immigration is characterized by an average population that is more qualified, younger and with a greater labor participation than the Chilean population. Third, relative to other countries, Chile poses fewer legal impediments to enter the labor market, and unlike other migratory cases, shares the language and other cultural aspects with a majority fraction of the immigrant population. To update our trend growth estimate, we use the population projections for the period 1992-2050, published by the National Statistics Institute (INE) at the end of 2018. These reflect the significant immigration flow observed since 2015, which is expected to continue to be important in the coming years (Figure 5). This affects the projection of the labor factor and, through it, the growth capacity of the economy. The other forecasting assumptions do not undergo major changes with respect to the fiscal year of 2017, except for the updating of the Quarterly National Accounts figures and an explicit modeling of the way in which capital and total factor productivity respond to the immigration-related increase in the labor factor.

In this judgment, the initial fall in productivity is combined with Page 3 of 18  the increase in the labor force and the expected lags in the adequacy of the capital stock in response to this phenomenon. The updating of potential growth, together with the performance of the economy in the first quarter, drive the activity gap level (-0.7 percentage points) to be wider than previously considered (Figure 6). It is important to note that, with respect to last December, the estimated level of the activity gap is greater in the beginning—the first quarter of 2019—, but also throughout the projection horizon. Although first-quarter activity figures play a role in the former, in the latter the fundamental factor is the potential growth update. The baseline scenario assumes that the gap will gradually close along the projection horizon, although at a slower pace than previously expected due to the magnitude of the adaptation process that the economy will have to go through in the face of the migratory shock. II.5. The neutral MPR About the neutral policy rate, I think a couple of conceptual clarifications are in order. The neutral MPR is defined as the rate that is consistent with a GDP in its equilibrium (trend) level and an inflation rate in the 3% target. All this, once the effects of transitory shocks in the economy have dissipated.
Orderly functioning financial markets are vital not only for the efficient allocation of financial resources in the economy but it is also essential for the transmission of the monetary policy and for preserving financial stability. While competitive forces are expected to result in efficient and optimal outcomes, central banks in emerging economies have had the important role of balancing between the market forces and intervention with the objective of ensuring the orderly functioning of the financial markets. It needs to be recognised that several important preconditions need to be in place to generate equilibrium prices that reflect the underlying fundamentals. This includes the institutional and market infrastructure, the incentive structure, the rules of the game and the level of financial literacy that recognise and understand the market signals. When these elements are still yet to be fully developed in many emerging economies, it increases the risk to instability. Thus, as a result of the stage of development of such markets, or its size or prevailing market imperfections, emerging economies have tended to be more vulnerable to greater volatility and circumstances in which markets do not self-equilibrate. The recent global financial crisis has shown that such dislocations have occurred even in developed financial systems. Institutional structures and rules that become deficient and less relevant heighten the risk for such unstable market conditions. Experience has also shown that such market dislocations have severe and far reaching adverse implications on the overall economy.

Investment on the contrary has fallen less than expected due to the dynamism in specific sectors (energy, public transportation) while its fundamentals continue to anticipate a weak performance. In this context, long-term interest rates have resumed an upward trend since the beginning of September, with 10-year peso rates close to 7% and indexed rates at 2.6%. These levels were observed in October 2021 and before that in February 2011. Most of this recent increase is related to external financial conditions. Consumer interest rates are at 28%, while commercial rates are around 15%, values not seen for more than a decade. Meanwhile, housing rates remain at just over 4%. Real 2  Bilateral Meetings  commercial and consumer loans fell by more than 2.2% and 3.0%, while housing loans grew by 2%. Projections and monetary policy decisions  A key driver for declining inflation is that the economy continues with the adjustment process which started this year, after the large imbalances it accumulated in 2021. In our forecasts, the economy will begin to contract in annual terms from the end of the third quarter of 2022 and continue to do so in 2023. This will keep the activity gap in negative territory for several quarters, which is consistent with the spending adjustment required to reduce inflation to the 3% target within two years. The spending adjustment will also reduce the high level of the current account deficit.
Rodrigo Vergara: Chile's September 2016 Monetary Policy Report Presentation by Mr Rodrigo Vergara, Governor of the Central Bank of Chile, of the Monetary Policy Report before the Honorable Senate of the Republic, Santiago de Chile, 7 September 2016. * * * The Monetary Policy Report of September 2016 can be found at www.bcentral.cl  Introduction Mr. President of the Senate, Mr. Ricardo Lagos-Weber, honorable senators, ladies, gentlemen, I thank you for inviting the Board of the Central Bank of Chile to present our Monetary Policy Report. As it does in September each year, this issue coincides with the Central Bank’s Report to the Senate, presenting our vision of the recent macroeconomic and financial developments in Chile and abroad, together with prospects and implications for monetary policy conduct. After more than two years above the tolerance range, last July the CPI’s annual inflation descended to 4%. The baseline scenario that I will be sharing with you in a minute assumes, as do private expectations, that it will continue to approach the 3% target in the coming months, to close the year at 3.5%. Why has it been so high for so long? We can blame it on the significant depreciation of our peso, driven by the much needed readjustment of an economy confronted with the end of the commodity price supercycle, the end of a very pronounced cycle of mining investment, and a domestic weakening associated with a decrease in the country’s capacity for long-term growth.

Potential growth differs from trend growth in that it can be affected by temporary shocks to productivity and constraints to factor use that may alter our productive capacity over the short term, but not in the 3 / 14  BIS central bankers' speeches  long. That is why our trend GDP growth estimates are a little higher than our potential growth estimates. Our latest evaluations place trend growth at 3.2%, three tenths of a point less than year ago estimates. Meanwhile, we forecast potential growth for 2016 and 2017 between 2.5% and 3%, compared with the 3% to 3.5% range estimated last year for the same period. Moreover, incoming figures suggest that potential growth will take longer to converge with trend growth. Anyway, our assessment of the current output gap is not very different from what we foresaw a year ago. This, because although since then we have revised downward our 2016 GDP growth figure by something more than one percentage point, at the same time we lowered our estimate for potential growth and 2015 GDP growth was revised up (figure 10). In recent months, financial conditions from the standpoint of borrowing costs have remained favorable. The fees charged in commercial, consumer and mortgage loans are near record lows. At the same time, growth in the stock of consumer and commercial loans has recovered from a year ago. The opposite is true of mortgage loans, which have decelerated from earlier this year. This low credit cost coincides with also low long-term interest rates.
Thus, by promoting a digital euro we must acknowledge that the Eurosystem is potentially putting its reputation at stake in that it remains liable for the overall functioning of the digital euro architecture whether it decides to rely on third parties for its distribution and operation or not. That said, the biggest source of concern is how a non-controlled expansion of the digital euro as a form of investment could, indeed, threaten the ability of authorities to properly maintain financial stability. As a matter of fact, a too attractive and accessible digital euro could foster a significant migration of banks deposits, thus compromising their intermediation and lending capacity plus also likely destabilizing the entire banking system in times of financial stress. To prevent these macroeconomic consequences from happening, ongoing discussions are currently focusing on what potential safeguards could be built into the digital euro, yet final decisions remain pretty much open at this stage. The main reason being they not only depend on the practical feasibility of the various available tools but also on the likelihood of different scenarios to materialize and the extent to which the latter may actually compromise banks’ resilience. As such, the fine-tuning of design features of the digital euro calls for additional research which I strongly believe the members of CEBRA are best positioned to provide us with. As of today, operational and legal considerations have been the bulk of our work thus far.

Intrinsically Linked, One with the Force The FOMC is mandated by Congress to promote maximum employment and price stability. The goals of our dual mandate are intrinsically linked. Specifically, price stability is essential for the economy to reach its full potential and to sustain maximum employment over the long term. Since the pandemic, imbalances between demand and supply have persisted throughout the economy, leading to high inflation and a tight labor market. Although we have seen some signs of a gradual cooling in the demand for labor—as well as for some goods and commodities—overall demand continues to exceed supply. I'll first discuss what this means for employment. At the national level, job growth has been robust, with monthly job gains averaging about 220,000 over the past three months. Other indicators show that labor demand is gradually slowing, yet remains very strong. For example, job openings have come down from their peak level in March of last year. Still, the ratio of job openings to unemployed far exceeds levels prevailing before the pandemic, when the labor market was very strong. Similarly, quit rates have been gradually declining, but are above pre-pandemic levels. In addition, the unemployment rate is at a historically low level of 3.4 percent. And in April, the employment-to-population ratio for those between the ages of 25 and 54 reached the highest level since 2001. The strength of the labor market is evident in parts of the Federal Reserve's Second District. Fairfield County in Connecticut has fully recovered from the pandemic.
Kate Barker: Monetary policy – from stability to financial crisis and back? Speech by Ms Kate Barker, Member of the Monetary Policy Committee, Bank of England, at the National Institute of Economic and Social Research, London, 8 March 2010. *  *  *  I would like to thank Matthew Corder and Jake Horwood for research assistance and I am also grateful for helpful comments from other colleagues. The views expressed are my own and do not necessarily reflect those of the Bank of England or other members of the Monetary Policy Committee. It is a particular pleasure for me to have the opportunity to return to NIESR, where I worked in the early 1980s in the aftermath of a previous recession, to talk in my present role as a policy-maker. At that time, one of my responsibilities was to monitor and project world trade – I am very thankful that I didn’t have to deal with the analysis of a fall in trade of the magnitude seen in this recession, when world trade 1 fell by a cumulative 18% over the fourth quarter of 2008 and the first quarter of 2009, before starting to recover – up 11% on the low point by the end of 2009.

But with the public sector now seeking to reduce its own deficit, concern over likely improvement in the UK’s external balance would suggest that a fast recovery in the UK would only be possible if the household and corporate sector balance sheets were to deteriorate. It is relevant for monetary policy decisions to consider whether  6  BIS Review 27/2010  this implies a renewed risk to economic and financial stability further in the future. So the judgement about the choice of policy horizon remains, for me at least, one which is finely balanced. I am here suggesting that the optimal horizon to consider may depend on the precise economic circumstances. There may be merit in considering risks beyond the present forecast horizon which might result from different choices of paths for future monetary policy. Quantitative easing These difficulties of policy judgement are compounded by uncertainties around quantitative easing (although it is important to recall that the low level of Bank Rate is also having a continuing expansionary impact on the economy). These uncertainties can of course be overstated, as quantitative easing works in many respects in a similar way to changes in Bank Rate. And I have no hesitation in saying that it was the right policy to deploy, and to deploy at significant scale, in the circumstances which faced us last spring when the downside risks to the economy were very significant.
It appears that growth in investment will increase in the period ahead: the high level of investment in the petroleum sector will contribute to higher investment growth in the offshore supplier industry. There are signs of rising investment in the construction industry. "Repatriation" is also being considered in Rogaland: the Gjestal Spinneri spinning company is looking at the possibility of investing in a new facility in Oltedal, enabling the company to transfer production from the UK to Norway. Employment is rising, with the most marked increase in the construction sector. Almost a third of the enterprises report that shortages in the supply of qualified labour may constrain output growth. Through the past year, there have been increasing reports of higher selling prices. One in four manufacturing enterprises is expecting a higher rise in prices this year than in 2004. In retail trade, two in three enterprises are expecting an accelerating rise in prices. The picture is mixed for the corporate service sector. Profitability is still improving considerably in all sectors. This reflects both an increase in volume and cost reductions. In the adopted budget for 2005, the structural, non-oil deficit increases compared with 2004. It therefore appears that fiscal policy will provide some stimulus to growth this year. In the National Budget for 2005, the underlying rise in expenditure over the central government budget was projected at 5.2 per cent, which is somewhat lower than the previous year and somewhat lower than projected nominal growth in mainland GDP.

rates based on a sufficiently large number of transactions. The Libor administrator, ICE Benchmark Administration (IBA), reacted to the FSB report by announcing further improvements to ensure that the Libor rates would become better established through the use of actual transactions. Such actual transactions will be used either directly, for calculating the Libor rates, or indirectly, for underpinning the contributions. In this context, the inclusion of short-term loans to large customers or money market instruments, in addition to interbank market transactions, is being examined as a future possibility. In order to assess the FSB proposals, surveys are being conducted to collect data in the currency areas concerned. The SNB conducted such a survey at the beginning of summer for Switzerland, collecting data on bank transactions on the interbank market and with large customers, as well as on trade in money market instruments. More than 50 domestic and foreign banks took part in the survey. The results confirmed that the small number of actual transactions on the money market currently constitutes a problem for the creation of robust benchmark interest rates. Consequently, it seems improbable that a pure transactions-based approach could be implemented for the Swiss franc. This is also the case if other transaction types and additional instruments are taken into account. For this reason, the Swiss franc Libor will continue to be based mainly on contributions by participating banks. 1  2  IOSCO is the International Organization of Securities Commissions.
We are all eyewitnesses to the tremendous economic impact of the integration of hundreds of millions of people in China, India, and the former Soviet Union into the world trading system. Globalisation has magnified world supplies of manufactured goods and capital as well as the labour force. Prices of all three have changed, and we have not been immune to those changes. Between 1995 and 2005 the prices of consumer goods imported into Britain fell by around one-third relative to the average price of other goods and services. But the greater supply of manufactured goods from newly-industrialised countries has come at the cost of a greater demand by those same countries for energy and raw materials of all kinds. The prices of oil, steel, copper, lead and nickel have all more than doubled. And in a buoyant British labour market it is not just foreign-born footballers who have been in demand. Over the past two years, around half a million migrant workers (or possibly considerably more, we simply do not know) have arrived from the new member countries of the European Union and elsewhere in the world. It is unlikely that migration on that scale has had no effect on wages, or, indeed, on rents and house prices. Some of you may be tempted to think that because the growth of the Chinese economy has affected key prices in our own economy, inflation in Britain is now largely determined overseas. Low inflation in industrialised countries, it is argued, is made in China.

But I hope you can see that in its deliberations, the MPC has adopted the spirit, if not the literal shape, of the Round Table. BIS Review 94/2006  3