samchain/econo-pairs-v1 huggingface dataset:
Given the information at the Bank’s disposal and the assessments made by the Bank at the time the projections are made, the interest rate forecast in the Inflation Report will reflect a monetary policy that provides a reasonable balance between the objectives of stabilising inflation at target and stabilising output and employment. This forecast might in many cases be close to market expectations, but this will not necessarily be the case. When the interest rate forecast reflects a monetary policy that provides a reasonable balance, it contributes to monetary policy predictability. With a predictable monetary policy, market participants can react to new information in a way that contributes to stabilising developments in output and inflation. This makes monetary policy more effective, especially if market participants share the central bank’s analyses and assessments. To be successful, monetary policy must be capable of influencing expectations. This is essential to effective monetary policy. The essence of this argument is that it is primarily through the expectations channel that the central bank can influence economic developments. The expectations channel is the most important channel for monetary policy transmission. 3 The central bank determines the shortest money market rates via the key rate. The shortest rates, however, are of limited importance to economic agents’ consumption and investment decisions. These decisions depend more on agents’ expectations with regard to future developments in the key rate. The key rate is primarily effective because it influences market expectations concerning future interest rates.

This is primarily attributable to a rise in the prices of imported goods. The longer-term inflation forecast is virtually unchanged. For 2019 it stands at 0.6%, up from the figure of 0.3% last quarter. For 2020, we anticipate an inflation rate of 0.7%, compared to 0.6% last quarter. The forecast for 2021 is 1.1%, 0.1 of a percentage point lower than last quarter. The conditional inflation forecast is based on the assumption that the SNB policy rate remains at – 0.75% over the entire forecast horizon. Global economic outlook  Our inflation forecast is based on assumptions regarding the development of the global economy. The signs from the global economy remain mixed. GDP growth picked up in the first quarter, with all large economies recording above-average expansion. However, manufacturing output again tended to weaken in a number of countries. This has been accompanied by subdued capital spending and a decline in the global trade in goods. The weakening in industrial activity is attributable to various factors, including difficulties faced by specific sectors – in particular the automotive industry – as well as the impact of protectionist measures and increased uncertainty. On the labour markets, the signals have remained positive overall. Employment figures have risen again in the advanced economies. Unemployment has continued to decline, and is now  Page 3/5  Berne, 13 June 2019 Thomas Jordan  News conference  at or close to historic lows. This favourable situation on the labour market is supporting consumer demand.
9 In March 2016, the FPC raised the countercyclical capital buffer rate to 0.5%, consistent with its view that financial conditions had moved out of the post-crisis phase, and the Committee’s intention to move gradually toward a buffer rate in the region of 1% in a standard risk environment. Following the result of the EU referendum, this rate was reduced to 0% in order to reduce regulatory capital buffers and increase banks’ capacity for lending as the real economy goes through a period of adjustment. 10 Aikman et al (forthcoming). 4  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  4  11  Under a reasonable calibration , a 15pp increase in credit growth in both countries over three years would increase the probability of a crisis by more than 6pp, as shown by the dark blue bars in Chart 3. Were there a reciprocity agreement between the two countries - by which an increase in the countercyclical buffer in one country is applied to lending in that economy by banks in the other country - they would both increase the countercyclical buffer by around 1pp, bringing the probability of a crisis down to only 1.8pp higher than before the shock - as shown in the yellow bars. However, if there were no reciprocity, any tightening of the countercyclical buffer will be partly offset by leakages. The higher buffer would boost resilience by less since foreign lenders in each country would be unaffected, reducing its overall effect on the crisis probability.

Mervyn King: Balancing the economic see-saw  Speech by Mr Mervyn King, Deputy Governor of the Bank of England, to the Plymouth Chamber of Commerce and Industry’s 187th Anniversary Banquet, on 14 April 2000. *  *  *  Mr Chairman, distinguished guests, Ladies and Gentlemen, I was delighted to receive an invitation to speak at your 187th Anniversary Banquet. Plymouth people are brave souls. And few are braver than those who choose to listen to a central banker at 10 o’clock on a Friday evening. The more so, when I tell you that our ambition at the Bank of England is to be boring. Not, I hasten to add, at events like this. But in our management of the economy where our belief is that boring is best. Macroeconomic policy has, for most of our lifetime, been rather too exciting for comfort. As Miss Prism told her charge in The Importance of Being Earnest, “Cecily you will read your Political Economy in my absence. The chapter on the Fall of the Rupee you may omit. It is somewhat too sensational”. If the rupee was too sensational, what words could describe the drama of sterling during the past fifty years? Devaluations in 1949 and 1967, eight-week membership of the European “snake” in 1972, and the Exchange Rate Mechanism (ERM) which we joined in 1990 and left in September 1992. And now, of course, sterling’s remarkable strength against the new currency of the euro.
This is because, under inflation-targeting, monetary policy can be flexibly combined with macroprudential measures to address concerns on financial stability without undermining the credibility of monetary policy. The Bank of Thailand has pursued this line of flexibility since 2004. Moreover, inflation-targeting also offers flexibility in the setting of the inflation targets in terms of the choice between core and headline inflation, as well as the level of the inflation targets itself. BIS Review 36/2010  3  This flexibility means that monetary policy will have greater room to maneuver in responding to shocks. With this flexibility, my view is that inflation-targeting remains useful as a framework for monetary policy in emerging economies. The second challenge is how to manage the macro-implications of large and persistent capital inflows, especially the risk to financial stability, in the context of a small open emerging economy. At this time, this challenge is real for most countries in the region and the challenge is more demanding compared to the similar episodes in the 1990’s. This is because this time capital flows are not linked to the financing of payments imbalance in the majority of economies in the region, but are a reflection of a global phenomenon of ample liquidity worldwide. Hence, there is a potential for capital flows to be larger and more volatile, and effective management of its impact will require a constellation of policies, both economic and financial.

Since then, reform of the policy regime to increase flexibility, especially the exchange rate, has contributed importantly to greater resiliency and abilities of the economies in Asia to adjust to changes in the external environment. So, the fact that the Asian economies have done better this time is not only because of the policy response during the crisis, but also because of the policy choice that was made long time ago to increase flexibility. Let me now turn to the second part of my talk on the post-crisis environment and the challenges for emerging markets. The challenges for emerging markets in the post-crisis world will be shaped importantly by the forces of change that will emanate in the new global economic and financial environment. Some of these forces will relate to cyclical shifts in trade and financial flows in response to  2  BIS Review 36/2010  new configuration of risk and opportunities that arises. Others will represent a more fundamental change as the new structure of economic and financial relations between countries emerges to replace the old structure that had been dismantled by the crisis. Recent discussion on this issue has pointed to the new normal global growth, the rise of Asia, and the increased role of government in the economic system as the new economic realities in the post-crisis world. But amongst these three possible new changes, I think the most important that will have far-reaching implications for emerging economies will be the durability and the composition of global growth.
financing mature economies’ expenditure with world savings. Does this situation correspond to the efficient allocation of capital and if not how do we explain it? More generally, is there any likelihood that a chain that hinders balancing mechanisms has been established? The foreign exchange intervention operations carried out by several central banks help to finance the US budget and external deficits. In the United States, the corresponding maintenance of long-term interest rates at a low level fosters the US domestic savings-investment imbalance. In the Asian countries, and particularly China, the increase in trade surpluses and its corollary, the worsening of the US imbalance, exerts upward pressure on the currencies while swelling foreign exchange reserves increase the costs of an appreciation vis-à-vis the US dollar. Does this configuration correspond to a mutually advantageous and sustainable situation? In this second session, Bill White, Economic Adviser at the Bank for International Settlements, will clarify these paradoxes in the light of the work carried out by the latter organisation, which makes a vital contribution to the analysis and promotion of macro-financial stability. In the third session, which will tackle economic policy adjustment and responses to the increase in global imbalances, we will examine private and public players’ ability to adapt to the current situation. Can the behaviour of private agents, through a change in their savings or the redirection of capital flows, lead to a spontaneous decrease in global imbalances without engendering destabilising adjustments on the financial markets?

In the long term, according to Paul Krugman, the concept of the competitiveness of an economy merges with that of its productivity: the increase in the standard of living in the United States, Japan or Europe, which, in keeping with Professor Laura d’Andrea Tyson’s  BIS Review 80/2005  1  definition, is the ultimate indicator of a country’s competitiveness, has in fact, excluding all external factors, tracked developments in national productivity over several decades. In addition, the flexibility that enables an economy to specialise in promising sectors determines both developments in its productivity and its competitive position: several recent studies show that labour or product market rigidities may thwart the emergence of an ICT-producing sector and limit the use of these technologies in the other sectors, which holds back productivity growth and the development of exports of products that are in high demand. Second change: the advent of new players in international trade of goods and services and international division of labour. Of course, this is not an unprecedented development – it has occurred several times since the Second World War, with Japan and also with the newly industrialised Asian countries. It has nevertheless taken on a new dimension due to the newcomers’ size and competitive edge, the liberalisation of capital flows and the decrease in transport and communication costs.
Despite the volatile global risk perceptions in the fourth quarter, market interest rates maintained their downward trend on the back of downward revisions to future policy rate expectations. Accordingly, the benchmark bond rate continued to hover around all-time lows (Figure 11). Meanwhile, we think that the fall in inflation expectations have contributed to the decline in market rates as well. 6  BIS central bankers’ speeches  The decline in market interest rates was more obvious for the shorter maturities during the final quarter, resulting in a steeper yield curve relative to the previous quarter. The CBRT’s rate cuts over the last two months caused short-term market rates to fall quickly. On the other hand, longer-term interest rates displayed only a modest decline, since the CBRT did not provide any explicit signal about the future course of policy rates. Yet, despite the volatile global risk appetite, long term interest rates remained at historically low levels and relatively stable, reflecting prospects of a prolonged low-interest-rate environment in Turkey (Figure 12). The decline in nominal market rates also affected real interest rates, as real medium-term rates remained at unprecedented lows (Figure 13). BIS central bankers’ speeches  7  After following a similar trend seen across other emerging market currencies in the post-crisis period, the Turkish lira has recently taken a different path and experienced a relative depreciation. It is worthy of notice that this divergence started with the Rate cut signal in December and has become more obvious after the actual rate cuts (Figure 14).

As predicted in the previous report, the decline in inflation was due to the sharp drop in unprocessed food prices. Accordingly, the annual rate of increase in food prices was 7.02 percent at the end of 2010, undershooting the October estimate of 10.5 percent. The slowdown that occurred was sharper than we expected. These developments in unprocessed food prices explain the almost one percentage point deviation in short-term inflation forecasts. In fact, as also illustrated on the slide, inflation excluding unprocessed food and tobacco remained in line with the outlook presented in the October Inflation Report (Figure 3). 2  BIS central bankers’ speeches  Food prices became the main determinant of the course of consumer prices in the last quarter of 2010 as well. Food prices that posted record highs in the third quarter due to the hikes in unprocessed food prices, declined in the last quarter as opposed to the previous years (Figure 4). Moreover, the favorable developments in inflation in this quarter did not remain limited to food prices; quarterly inflation across all goods and services items stayed below the average of previous years (Figure 5). Meanwhile, energy prices, which followed a horizontal course in the second and third quarters of the year, increased in the last quarter parallel to the developments in international oil prices and exchange rates. The core inflation indicators decelerated in the fourth quarter of 2010 compared to the third quarter (Figure 6).
Third, the banks need to assume that bank secrecy in cross-border operations will be replaced by the automatic exchange of information (OECD Standard for Automatic Exchange of Financial Account Information). However, for honest tax-paying customers, protection of privacy and the associated legal certainty remains a legitimate concern, even under the OECD standard. In order to remain attractive as a global wealth management centre, Switzerland must therefore develop a plan within the context of this OECD standard which guarantees protection of privacy in the long term. This could create an important element of differentiation for the Swiss banking centre. It will be important to separate the issue of protecting privacy from that of tax conformity. In other words, enforcement of the legitimate protection of privacy must not be abused in order to elude tax obligations. Vice versa, measures aimed at ensuring compliance with tax provisions must not lead to any diminishment in the protection of privacy. For instance, this means that customers must know, right from the start, which data will be passed on from one tax authority to another, and for what purposes – and which not. At the same time, care must be taken to ensure that such a plan can be implemented in accordance with the international standards. This will guarantee legal certainty for customers while guarding against continual vulnerability of the future Swiss legal framework to attack.

Nevertheless, this supportive action clearly showed us that systemically important banks are associated not just with advantages, but also with significant risks for the general public. Second, the reputation of the financial industry worldwide has suffered considerably in the wake of the crisis. In the general public at large, the enormous losses, the government rescue packages, the manipulation of the Libor interest rates and the suspicion of improper agreements in the setting of exchange rates, have led to a loss of confidence in the banks. This is true of Switzerland, in particular, where, after all that has occurred, questions relating to the banks’ sets of values and the benefits of a large banking industry for our country are being increasingly raised. Third, the most important pillar of the Swiss banks’ export business – cross-border wealth management – has suffered major reputational damage. For many decades, the practice whereby the assets held by foreign bank customers in Swiss bank accounts included an element of untaxed wealth was tolerated internationally. In recent years, however, this situation has landed Switzerland in politically delicate situations on many occasions and involved several banks in legal disputes. A worldwide change in values and the disclosure of cases of assisted tax evasion have discredited bank secrecy as a legitimate instrument for the protection of the privacy of foreign customers. Its economic importance for the Swiss banks has therefore largely dissipated. These developments have also resulted in considerable legal uncertainty and increased the risk of individual bank export markets disappearing, either partially or completely.
National regulators have been stepping up engagement with financial institutions on issues pertaining to culture and conduct. The industry must itself take collective responsibility to promote good practices and develop codes of conduct, and hold institutions accountable to their peers. Here in Australia, you have set a good example. The Australian Bankers’ Association has commissioned an independent review of sales commissions and product-based payments in retail banking that is now in its final stages. Banks have also agreed to share information among themselves on financial advisers with a history of poor conduct. But ultimately it is the financial institution itself that must bear responsibility for getting the culture right. There are a couple of things they can focus on. 2/7  BIS central bankers' speeches  First, set a clear tone from the top that is supported by concrete policies and leaders that walk the talk. Management decisions must consistently reflect the firm’s espoused values. Second, align human resource (HR) policies with the desired culture. From recruitment and training to rewards and penalties, compensation to career development, HR policies send the clearest signal to staff on the values that the firm regards as important. This is difficult but important work. We must move the financial industry to look beyond the question “is this legal” to the larger question “is this right”. Positioning regulation for technological innovation Let me now move to the third key thrust of financial regulation going forward – how to position for technological innovation. Financial technology or FinTech is transforming financial services.

The guidance also sets out an indicative template containing the type of information we think we will request from firms following a loss, and also expectations of firms with approved internal models. We note that this is an area where the Industry itself is keen to ensure that it is well prepared and we welcome working with it on this topic. None of us will have a crystal ball to plan perfectly for such an event, and as decision makers we will only be able to make final judgements on how to respond at the time, once we have the facts as best as we can gather them. However, we still think there is more that can be done to think through how firms would go about gathering initial loss information, what information their boards are likely to need to see to inform their response, and some of the practical challenges which might arise for firms. Capital and model drift Given the challenging market conditions I have referred to earlier, and the uncertainties I have just discussed, it is all the more important that firms hold adequate and appropriate capital against the risks they face. As you will also be well aware, your and our work in the run up to January this year included significant work on internal models, and it would be unsurprising if there was not some collective sigh of relief within the industry after January given the work involved to get to that point.