samchain/econo-pairs-v1 huggingface dataset:
Time to start a discussion about the target variable Set against this background, it is my belief that it may again be time to open up a discussion about the target variable. One option, which I personally find appealing and fairly natural, is to face up to the consequences and allow an inflation measure upon which interest rate changes do not have such a direct impact to not only be the “steering” variable but also the target variable. The indices which come to mind first in that case are the CPIF and HICP. One  12  The exact course of the policy rate path is obviously crucial in terms of how much and how long CPI inflation will deviate from CPIF inflation. A policy rate rise implemented more quickly leads, all things being equal, to a greater but briefer deviation than an equally large but more protracted policy rate rise. BIS central bankers’ speeches  5  advantage of the latter index is that it is an internationally comparable measure, but the differences compared with the CPIF are quantitatively not particularly large. It is worth pointing out that this would not lead in practice to any particularly major change in monetary policy. After all, the Riksbank already typically aims for a CPIF inflation rate of around 2 per cent within the forecasting horizon. It is also worth emphasising that the purpose of changing the target variable would not be to make it easier for the Riksbank to hit the inflation target.

7  Simulations by Dorich, Labelle, Lepetyuk and Mendes (2015) using a model for the Canadian economy indicate that a target of 2 per cent leads to a result that is almost as good as if the target were raised to 3 or 4 per cent, given that the policy rate can be complemented by quantitative easing as well as active and credible supporting communication. BIS central bankers’ speeches  3  Major direct impact of interest rate changes makes Swedish CPI unique This direct impact of interest rate changes on inflation is quite unique to Sweden. The reason for the effect is that we include household mortgage costs in the CPI in a slightly different way than most other countries with inflation targets. More specifically, we attempt to measure households’ costs for living in an owner-occupied property, where interest expenditure is an important component.8 The CPI is calculated according to roughly the same principles in Canada, for example, but in practice the interest rate changes have a much smaller impact on the CPI there than here in Sweden.9 In Australia and New Zealand, interest rate changes also previously had a major direct impact on the CPI, but the method for calculating CPI changed in both countries at the end of the 1990s in a way that eliminated such effects.10 They now apply a method which is principally based on following price developments of new housing, a so-called net acquisition approach.
4  BIS central bankers’ speeches  Figure 2 Monetary policy rates around the world (1) (percent) 9  9  7  7  5  5  8  8  6  6  4  4  2  2  3  3  1  1  0  0 06  07 Chile  08 09 Developed econ. (2)  10 11 Emerging eco. (3)  (1) Corresponds to a simple average of the reference rates for each group of countries. (2) Includes Euro area, Japan, United Kingdom, and United States. (3) Includes Brazil, Czech Republic, China, Colombia, Hungary, South Korea, Mexico, Peru, Poland, and South Africa. Sources: Central Bank of Chile and Bloomberg. Figure 3 U.S multilateral nominal exchange rate (*) (index, March 1973=100) 160  160  140  140  120  120  100  100  80  80  60  60 73  79  85  91  97  03  09  (*) An increase indicates a depreciation of the dollar against main trading partners. Sources: Bloomberg and U.S. Federal Reserve.

Global rebalancing of the world economy needs countries in a strong cyclical position to direct domestic demand to imports, while countries with insufficient domestic demand to increase exports. Exchange rate adjustment should facilitate this process. Therefore, a faster appreciation of the yuan would relieve some appreciatory pressures in other EMEs, making the adjustment more balanced. But, for this to be achieved on a sustained basis, it is not enough to let the exchange rate adjust. Structural reforms will also be required to achieve a sustainable and efficient reduction of China’s savings rate. On the other hand, a rise in advanced economies’ interest rates, in particular in the U.S., would also alleviate currency tensions. However, the main responsibility for policymakers is to secure sustainable growth in their home economies that favors their citizens, and we all have to deal with the repercussions of those actions. The response in emerging market economies Emerging market economies have been facing two challenges as a consequence of this global environment. First, exchange rate appreciation and a resumption of capital inflows, and second, inflationary pressures. Sometimes, these two challenges may lead to inconsistencies in macroeconomic management. However, it is important to highlight that in small open economies any attempt to persistently manage an exchange rate away from its fundamentals, in particular at an overvalued level, may end up leading to inflation. If the adjustment does not come from a change in the value of the currency, it will happen through inflation.
Thus, with growth momentum remaining firm but with prospects for higher inflation, the Monetary Policy Committee saw less need to keep interest rates at low levels. The committee was of the view that monetary policy should be more focused on economic stability, with the adjustment being gradually paced. This was the rationale behind the increase in the policy rate in August. Ladies and Gentlemen, Adjustments in the financial markets following the policy rate increase have been orderly. There has been an across the board increase in short-term money market rates as well as a rise in bond yields. But given present excess liquidity in the system, there will be some time lag before the corresponding adjustments in deposit and lending rates take place. Going forward, especially as the economy’s expansion gains further momentum, monetary policy will need to maintain economic stability and to ensure that inflation is kept within the target. lt is our intention to do whatever necessary to keep inflation in check and to ensure a continuation of economic stability. Ladies and gentlemen, Besides monetary policy, we have also taken measures to safeguard the economy against possible buildups of financial imbalances at the sectoral level. We have learned from the 1997 financial crisis that overshooting asset prices could pose a major risk to the economy. Therefore, to maintain economic arid financial stability, we need to be vigilant in spotting potential financial imbalances, particularly in the real estate and household sectors.

At this time, although monthly value of land transactions has risen back to the previous peak level in 1996 and bank credits extended to real estate developers has picked up, we feel that there is no sign of overheating in this sector yet. Latest land prices have increased only by 14 percent on average, while housing prices for low- and medium-income families rose by less than 10 percent over that of last year. Nonetheless, it is important to keep a watchful eye on developments in the real estate sector, by making sure that bank lending to this sector is prudent. And for our part, there is now greater willingness to use the necessary prudential measures to discourage or forestall any undesirable development. Financial institutions are now required to report all real estate loans exceeding 100 million baht. Any real estate lending that is deemed too risky would require immediate additional provisioning. This should help ensure that growth of the real sector is driven by quality growth with least amount of bubbles, and that policy is proactive enough to prevent a reoccurrence of the real estate bubble prior to the 1997 crisis. To improve our ability to monitor this sector, we have developed a housing price index in cooperation with a number of agencies including the Government Housing Bank. This housing price data will be important for assessing the underlying conditions in the housing market, and will allow us to monitor any concentrations of risk before they develop in this sector.
We are experiencing a simultaneous slowdown in all the leading economies. After the terrorist attacks on 11 September, moreover, there is an even greater risk of the cyclical decline being more pronounced and persistent. The almost simultaneous and marked change that occurred in the global economic climate in the latter part of last year was triggered to an important extent by rising energy prices, higher interest rates, falling stock markets and the abrupt swing in corporate investment. Weaker demand led in turn to stock adjustments and thereby to further downward effects on orders and production. At the same time, falling asset prices, not least in stock markets, tended to subdue private consumption. On top of this, the terrorist attacks entailed a loss of production in the short run and postponed a cyclical upturn. In many respects, economic activity is following the normal cyclical pattern and is therefore not all that surprising. After a long period of expansion, sooner or later activity turns downwards while the economy gathers strength for a renewed upward surge. While there is nothing exact about the succession of cyclical phases, one can say that activity has always fluctuated more or less regularly. What was unexpected, however, is the rate at which activity has slackened. The downturn seems to have been accentuated by a reaction to the excessive optimism which the technological breakthrough had generated, giving rise to the notion of a new economy.

Urban Bäckström: The Swedish economy Speech by Mr Urban Bäckström, Governor of the Sveriges Riksbank and Chairman of the Board of Directors and President of the Bank for International Settlements, to the Swedish Shareholders’ Association, Stockholm, 27 November 2001. *  *  *  First a word of thanks for the invitation to this evening’s meeting. I intend to talk about the Swedish economy and monetary policy. The past year has been marked by a successive weakening of economic activity in Sweden as well as abroad. Forecasters all over the world have made sizeable downward revisions to the prospects for growth both this year and next. Consider the picture of the economic future that Consensus Economics compiles once a month from the predictions of 200 professional observers. At the beginning of this year the combined assessment was that in 2001 and 2002, GDP growth in the United States and Sweden would amount to between 2.6 and 3.5 per cent. It was foreseen that the slowdown would be comparatively moderate and be followed by a quick recovery. Today, growth in the United States is judged to be just a modest 1 per cent or so this year and even weaker in 2002. In Sweden, GDP is now expected to rise 1.4 this year and 1.7 per cent next year. In other words, it now looks as though the slowdown will be both deeper and more protracted than many observers counted on less than a year ago.
Eddie Yue: Opening remarks at the commencement event of e-HKD Pilot Programme Opening remarks by Mr Eddie Yue, Chief Executive of the Hong Kong Monetary Authority, at the commencement event of e-HKD Pilot Programme, Hong Kong, 18 May 2023. *** Good afternoon, everyone. A very warm welcome to all of you for joining today's commencement of the e-HKD Pilot Programme, especially to those of you flying from other parts of the world. Central bank digital currency, or CBDC, is one of the hottest topics in the central banking community today. Over a hundred central banks are studying it and a few dozens of them are working on various types of pilot trials. The HKMA has been researching and piloting on CBDC since 2017. Apart from the exciting work that we are doing with our three partner central banks on the application of wholesale CBDC under Project mBridge, the HKMA has also been exploring the prospect of issuing retail CBDC, or e-HKD, in Hong Kong. e-HKD is Beyond Technology We conducted two rounds of market consultation in the past two years. Overall, the respondents are supportive of the e-HKD initiative and believe that e-HKD has the potential to make payments faster and more efficient while supporting the digital economy. However, we are cognizant of the fact that e-HKD is not and should not be merely a technology project.

But as the Chinese saying goes, "A thousand miles begins with a single step" (). We are grateful that you have all chosen to join us to take important first step in this meaningful e-HKD journey. I know you're all eagerly waiting to hear about the potential use cases, so I'll give the floor to each pilot group to share their creative ideas. Thank you. 3/3  BIS - Central bankers' speeches
As a matter of fact, we have switched from measures to prevent the inflation spiral from unwinding to the policy of persistent reduction of inflation and inflation expectations and we are sure that our consistent and smooth actions will help us reach the 4% inflation target in late 2017 without having an adverse impact on economic growth. The consistent and predictable monetary policy is a factor of reducing general uncertainty for business and, hence, the best environment for decision-making, i.e., the best conditions for growth in lending and investment activity. A desire to help the economy through premature cutting interest rates may have an opposite effect. We should stick to sound conservatism here. In order not to reproduce unstable imbalanced growth output and labour productivity should grow faster than income and demand. This will provide incentives for businesses to optimise costs and look for profitable segments. Our policy is spearheaded precisely at this. BIS central bankers’ speeches  3  It goes without saying that a more responsible fiscal policy (given the smaller budget deficit we will be able to cut rates faster) and competition development would be conducive to faster inflation reduction. Now, let me say a few words about current issues of monetary policy: they are more technical, but no less important, since they are related to the transition from the structural liquidity deficit to its structural surplus.

If the Bank of Russia inspection reveals insufficiency of the available capital to cover the risks assumed taking account of stress-testing outcome, or that the low level of riskmanagement procedures does not allow banks to assess the risks assumed correctly and they may face capital shortage in future, the Bank of Russia will establish targeted elevated capital adequacy requirements for such banks. So far, stress tests conducted by banks shall meet basic requirements, but we are adjusting parameters of stress scenarios and stress-test requirements. Their outcomes will be progressively taken into account in supervisory decision-making. The outcomes of banks’ stress-testing are supposed to be taken into account in assessing possibilities of bank mergers, agreeing on a resolution plan, and taking other significant supervisory decisions. Another important line of our activity is improving the system of bank resolution. Our resolution analysis (and over the past three years we took 28 resolution decisions) shows that investors usually do not invest in capital of banks under resolution, do not develop their business and sometimes use the balance sheet of banks under resolution for bad debts while forwarding a sizeable share of funds for resolution purposes to their own projects. That is why we have tightened control over the ongoing financial resolution. Supervision will be focused on all the transactions between the bank designated as a turnaround manager and the bank under resolution. The turnaround manager will be prohibited to deteriorate financial position of the bank under resolution with its bad assets.
The second risk is the long-term fiscal position of the United States. Recognizing that fiscal policy is the domain of the executive and legislative branches rather than the Federal Reserve, I would emphasize several points. For one, the current U.S. fiscal position is far worse than it was at the end of the last business cycle. For example, in fiscal year 2007, the budget deficit was 1.1 percent of GDP; in fiscal 2017, it was 3.5 percent of GDP. Similarly, federal debt held by the public was 35 percent of GDP in fiscal 2007, and 77 percent in fiscal 2017. Additionally, three factors will undoubtedly cause these budgetary pressures to intensify over time: the tax legislation will push up the federal deficit and federal debt burden; debt service costs will rise as interest rates normalize; and entitlement outlays will increase as the baby boom generation retires. Let me discuss each of these in turn. With respect to the tax legislation, the Joint Committee on Taxation estimates the cost at around $ trillion over the next 10 years.9 This estimate takes into consideration the likelihood that the legislation will boost the productive capacity of the U.S. economy somewhat—raising the economy’s potential growth rate—and that this incremental growth will generate additional tax revenues. To me, this seems like a reasonable estimate, recognizing that with any complex tax legislation, there is a high level of uncertainty about its impact on longer-term growth and revenues.

One obvious solution was to limit shareholder liability. This, it was felt, could broaden and deepen the pockets of the investor base, freeing up bank capital and credit. The United States had been an early-adopter, with Connecticut and Massachusetts permitting limited liability from 1817. Neighbouring states had quickly followed suit. Although limited liability had existed in parts of Europe from the 17th century, it was only during the second half of the 19th century that its tentacles spread widely.4 In the UK, wholesale change came with the Limited Liability Act and Joint Stock Companies Acts of 1855 and 1856. Interestingly, banking was slow off the mark. Limited liability status was at first not taken up enthusiastically. Bankers appeared to prize unlimited liability. It served as a safety certificate  2  Cleary (1965), Collins (1988). 3  Turner (2009). 4  Hickson and Turner (2005). 2  BIS central bankers’ speeches  for depositors, a badge of prudence. “A depositor would be much more likely to trust his money with a bank whose shareholders he knew must yield up to him the uttermost farthing”. This from the lips of a banking expert of the day.5 But unlimited liability in banking remained under attack. Walter Bagehot believed its risk benefits were illusory as many shareholders did not possess so much as the “uttermost farthing”. Bagehot believed unlimited liability generated its own incentive problem: the wealthy assumed too much risk for the control they could exercise, dissuading them from investing (Bagehot (1873)).
The “economics” of Europe starts from familiar arguments in favour of free trade and competition as the most effective means of ensuring that productive resources are efficiently deployed, promoting specialisation in areas of comparative advantage - and thereby satisfying consumer demands more effectively and increasing aggregate, macro-economic, welfare. These arguments apply, in principle quite generally - as much to international trade and competition as to regional trade and competition or indeed to trade and competition within individual national markets. The macro-economic benefits are less immediately obvious at the micro-economic level. Existing activity is threatened by greater competition, and there is a natural temptation - to employees, their employers and their national governments - to seek to defend their established activity through protective action in one form or another. The benefits of greater competition, and of the removal of barriers or distortions to free trade, on the other hand, flow essentially from the future activity that is likely to result - so that they are much less tangible. And the benefits - anyway in the short-term - do not necessarily accrue evenly across the free trade area - they accrue to those that are flexible and adaptable enough to take advantage of the new opportunities that free trade offers.

At our last monetary policy meeting, we upheld the assessment that inflation will converge to levels that are below, but close to, 2% over the medium term. Wages are picking up at a pace that is more or less in line with expectations from our models. One thing that has not worked out as expected is the transmission to consumer prices. This pass-through is not working in line with projections. We are analysing this very carefully. But we remain confident that it will eventually do so; we need to be patient and persistent. But what if the economic outlook deteriorates further and more permanently? In our baseline scenario, capacity utilisation will remain high and firms will be in a position to pass higher wages through to higher prices. That would be more difficult if growth remained below potential. Downside risks to growth could then lead to downside risks to inflation in the medium term. We are not at that stage yet, but this will be an important discussion point at the next meetings of the ECB’s Governing Council. But if the outlook becomes gloomier, what will happen then? Will the ECB’s Governing Council be even more careful in continuing on its cautious path towards monetary policy normalisation or could there be another turn towards more easing? I have never spoken about a normalisation of our monetary policy stance. I have always referred to a normalisation of our instruments. There is a big difference.