samchain/econo-pairs-v1 huggingface dataset:
Because monetary policy can also influence demand it can lean against such shocks. If successful, it can stabilise inflation. In this case, no output-inflation trade-off arises. This is the so-called “divine coincidence”. 10  In Figure 2, negative demand shocks would create a tendency for inflation and the output gap to move into the south-west quadrant. Similarly, for positive demand shocks, inflation and output gap would move to the north-east. Because in these cases, there is no trade-off between stabilising inflation and the output gap, it is relatively straightforward for monetary policy to keep inflation and the output gap close to the origin. Chart 1: For much of the great moderation period, data were consistent with predominance of demand shocks… Great moderation  3.5  In practice, data in these quadrants reflect lags in the transmission of monetary policy and other uncertainties: it takes time for monetary policy to  Inflation (%)  affect output, and for output in turn to affect inflation. But if monetary policy has been effective, these  3  deviations would not be expected to be either large or 2.5 Output gap (%)  persistent. This state of affairs characterised much of the “Great Moderation” in the United Kingdom, from  2  -1  0  1  1993 to 2007 (Chart 1), which was effectively a 11  1.5  1  period of demand management. Things are different when shocks drive inflation up or down independently of demand.

2 -6 -5 -4 Output gap (%)  -3  -2  -1  0  1  Such circumstances have characterised the period in  1  the UK since the global financial crisis (Chart 2), 0  which entailed a large adjustment to the supply side of the economy, meaning a lower exchange rate,  -1  lower growth, and higher inflation. Source: Bank calculations. Chart 4: … as has the euro area  Chart 3: US has continued to experience predominantly demand shocks, not trade-off shocks, since the global financial crisis…  Great moderation  Inflation (%)  Great moderation  6  Inflation (%)  Financial crisis and after  Financial crisis and after  4.5 4  5  3.5 4  3 2.5  3  8 2 -4  2 -8  -6  -4  -2  0 1  -2  0  4  1.5  Output gap (%)  1  2  0  2  4 Output gap (%)  0.5 0  -1 -2 Source: Bureau of Economic Analysis, CBO and Bank calculations. The measure of inflation is the four-quarter change in the personal consumption expenditures (PCE) deflator. The output gap is calculated using the CBO estimate of potential output from its August 2016 Update to the Budget and Economic Outlook. -0.5 -1 Source: Eurostat, IMF and Bank calculations. The measure of inflation is the four-quarter change in the harmonised index of consumer prices (HICP).
The previous trend growth update (2019), only considered changes in the labor factor associated with immigration to the country, without modifying the TFP growth assumption made in the previous estimate (2017). Page 6 of 27  As for the long-term prices of copper and oil, they are revised in opposite directions. Copper is raised from USD 2.7 to 3.3 per pound, while oil is reduced from USD 70 to 60 per barrel. It should be noted that these prices are the ones where the prices of copper and oil are expected to be in 10 years’ time. In the case of copper, this is different from the assumption used in the calculation of the structural rule, which corresponds to the average of the next ten years, and not its end point. The upward revision to the copper price stems from the expectation of exponential growth in copper demand associated with the “green wave”. This presents itself in a context where, although conventional demand is declining, the foreseen increase in production will be insufficient to offset the aforesaid demand increase due to said “green wave” towards 2030. For this to occur, new investment projects would need to enter the sector, and there are no such projects in sight. Moreover, in the past year different international organizations and specialized institutions have raised the copper price expectation five and ten years ahead and is now around USD 3.3.

The stronger boost to consumption, in a context of earlier closing of the output gap and increased cost pressures, adjusts our inflation projection up. Core inflation will close the year slightly below 4 percent annually. Higher energy prices will continue to dominate the volatile component. Thus, after rising in the second half of the year, total annual CPI inflation at December 2021 will be 4.4 percent. In 2022 and 2023, as fiscal and monetary impulses normalize, inflation will converge to 3 percent and remain there until the end of the policy horizon, that is, the second quarter of 2023 (Figure 17). To sum up, the higher activity forecast for this year is largely explained by the increase in private consumption, responding to the many stimulus measures adopted after the last Report. A significant number of these measures reflect that the fiscal policy is considerably more expansionary than previously expected. The outlook for investment and exports, on the other hand, is more limited, with a tendency to decelerate in the former. Thus, a recovery scenario notoriously biased towards consumption is emerging, which, if maintained or deepened with more procyclical policies, could incubate larger macroeconomic imbalances, a risk that should be duly monitored. IV. Re-estimating the structural parameters of the Chilean economy  The structural parameters correspond to longer-term estimates of different economic variables: namely GDP growth, the neutral MPR, and the prices of selected commodities, which provide context to long-term projections and monetary policy formulation.
On the contrary, incorporating these principles is excellent  6  BIS Review 34//2005  preparation for adopting Basel II in the future. For example, supervisors might choose to move towards a more risk-based approach to supervision, developing skills in assessing the quality of a bank’s risk management and its ability to assess risk exposures. At the same time, banks could be reminded of their responsibility to develop their own processes for evaluating their capital needs and a strategy for maintaining their capital levels, consistent with the principles of Pillar 2. With regard to the principles of market discipline in Pillar 3, supervisors may wish to focus initially on ensuring a baseline level of disclosures across all banks. This might include discussing with banks, investors, and other users of financial information their information needs and the tools available so that supervisors can tailor requirements accordingly. In my view, these two preliminary stages provide an excellent preparation for the “final” stage of moving to Basel II. With a strong foundation in place, supervisors can then select the alternatives within Basel II that are most appropriate for their own circumstances. Conclusion To conclude, let me insist on the general principle on which I think supervision should be built, which I mentioned before. Supervision needs to consider a broader analysis of the vulnerabilities internal and external to the banking sector, including the necessary macroeconomic and institutional elements, and those relative to the stability of financial markets on which banks operate.

Any discussion of Basel II should probably start with the 1988 Basel Accord, which established the first internationally accepted definition and measure of bank regulatory capital. In many ways, the 1988 Accord was a tremendous success story. It was adopted in over 100 countries, and contributed to the strengthening of bank capital at a time when a number of countries had experienced problems in their banking systems. It has become one of the benchmark measures of a bank’s financial health. While the simplicity of the 1988 Accord helped to foster its widespread acceptance, that simplicity has become a liability for some banks and supervisors. Almost 20 years later, industry developments in risk measurement and management have widened the gap between the regulatory capital measure under the 1988 Accord and the internal capital measures used at many internationally active banks. More sophisticated technology and telecommunications, as well as market innovations, have enabled banks to better measure and manage their risks. As a result, the Basel Committee determined that a new capital framework was needed that would address these developments for the most complex and sophisticated banks, but that would also be appropriate for less complex banks. The Committee also  BIS Review 34/2005  1  determined that the new capital framework should provide incentives for banks to improve their risk management practices without reducing the overall level of capital held in the banking system.
However it is also because we live in a changing world, where we must adapt as demands on our operations change – demands that may come from various directions. My theme today is that a modern, independent central bank needs to take many considerations in its monetary policy work, not least in its communication. There are above all two aspects that we must always take into account. The first is that we have a responsibility as an authority towards the Swedish people and their political representatives. The second is that we must communicate and interact with the financial markets when we implement our monetary policy. I intend to devote the major part of my speech to illustrating some different aspects of the demands made of us. The areas I intend to talk about are transparency, signalling and the future interest rate path. There are no sharp dividing lines between these areas. How we regard the future interest rate path is, for instance, part of our signalling, and the quality of our signalling in turn has significance for how transparent we are. Transparency in itself is part of our role as a public authority. But I nevertheless consider it worth discussing them under separate headings. The role as authority and interaction with the market Let me before I do so say a few more words about our role as public authority and our interaction with the market. I intend to begin with the latter aspect.

It has on these occasions been clearly understood that the Executive Board members are expressing their own personal opinions. One could call this a sort of “signalling by degrees”. That is, when the interest rate  7  See, for example, Giavazzi, F. and F. Mishkin (2006), “An evaluation of Swedish monetary policy between 1995 and 2005”, Reports from the Riksdag 2006/07:RFR 1, Committee on Finance. 6  BIS Review 40/2007  decision has been taken at the monetary policy meeting enough information should have already been signalled by degrees so that economic agents are not taken by surprise. And on the whole, our signalling policy appears to have worked quite well. But, like many other things, the demands made of our signalling have changed over time. Things look quite different today from when the inflation target was new and confidence in monetary policy was low. This is partly linked to the fact that for some years we have been an independent authority, with the demands for insight that this entails. It is also, as I have just implied, connected to the important changes we have recently made in our communication. Moreover, there may be some potential problems in the way we have signalled previously, although as I said it has worked fairly well. I intend to mainly focus on the time aspect of the signalling, that is, when or how often we signal or should do so.
So far, the ECB has consistently adopted the second approach to non-standard policies. In the early phase of the crisis, we re-absorbed the liquidity risk and the market counterparty risk that banks were facing in interbank transactions. In keeping with this second approach, the aim was to repair the functioning of the market, not to add stimulus in a situation in which the policy rate was still positive. OMTs, as their name suggests, will operate through outright transactions, not lending operations. But, in essence, they have the same purpose as the non-standard measures we adopted in 2008 and 2009: to price out a type of catastrophic risk premium that investors demand in conditions of market paralysis. It was break down risk in the early stage of the crisis, the risk that the payments system would seize up completely. It is break- up risk now. 5  The policy intervention works by reducing the supply of long-duration securities considered as risk-free and increasing the supply of zero-duration reserves. To the extent that private investors do not view these assets as perfect substitutes, in order for private investors to be willing to make those portfolio adjustments, the expected return on the long-duration securities has to fall. With less duration risk to hold in the aggregate, the market should require a lower premium to hold that risk.

In order to address this situation, one of the objectives in the Sixth  BIS central bankers’ speeches  1  National Development Plan is to enhance the capacity of women to participate in national development”. 1 The Report further states that “due to weak economic position such as lack of collateral required by most financial institutions, most women, especially the rural women, are unable to access investment capital to engage in business and other economic activities as individuals”. Access to affordable financial services – especially credit and insurance – enhances livelihood opportunities and empowers women and other marginalized groups to take charge of their lives as well as improve their social and economic equity. This is why financial inclusion is considered to be critical for achieving inclusive growth and poverty reduction. What do we mean by financial inclusion Women’s financial inclusion has been described as “a state in which women as individual, members of households and entrepreneurs, have access to the full range of financial products and services from convenient responsible formal service providers, offered effectively, responsibly and sustainably and at a reasonable cost to clients” These products include payments, savings, credit, insurance and pensions. The Finscope survey of 2005 and 2009 showed that access to financial services in Zambia has been low with results indicating only a marginal increase from 33.7% in 2005 to 37.3% in 2009. This signifies that further efforts are required.
Since the last Money Market Event a year ago, the international financial system has emerged from the brink of collapse, financial conditions have improved on a broad front and a hesitant economic recovery has been initiated. By and large, the trough on the financial front was reached in Q1 2009 while the economic low point was probably attained one or two quarters later. Exceptional fiscal and monetary policy measures contributed without doubt to these developments. Representative charts for last year show a strong recovery in equity markets, a return to calmer money markets, a decrease in credit spreads, and a return to  1  Source: Fed Flow of Funds Statistics, Datastream. 2  Source: Bloomberg. BIS Review 33/2010  1  more activity in corporate bond issuances. Noteworthy is the fact that, in contrast to developments in other countries, there was no credit crunch in Switzerland. In our country, as elsewhere, a very expansionary monetary policy has been a key element of the response to the crisis. From October 2008 to March 2009, the SNB carried out a massive reduction in the Libor target range, pursuing a de facto zero interest rate policy. As of March 2009, the SNB adopted measures termed “unconventional” in order to loosen the monetary reins further when there was no more room for interest rate reduction. These measures took three main distinct forms: longer-term repo transactions, purchases of bonds issued by domestic borrowers, and purchases of foreign currencies.

Today, viewed from an international perspective, the Swiss economy is in a relatively favourable position. GDP has been growing for two consecutive quarters. Inflation is back in positive territory but without excessive upward pressure. Fears of deflation, which constituted one of the major risks of the past year, have not yet disappeared but are receding. Employment is no longer falling and unemployment may be stabilising. The Swiss export sector was strongly hit by the crisis and is still fragile. Economic activity has been sustained by domestic consumption (both private and public) and by construction activity. Last year’s GDP growth, at –1.5%, constituted the worst performance for the Swiss economy since 1975. Yet this figure is considerably better than the corresponding figure for most developed economies. Let us spend a moment examining the remarkable fact that private consumption growth in Switzerland has remained positive throughout practically all stages of the downturn. Immigration and precaution are the two key words that explain this exceptional result (with a third contributing factor being the fact that disposable incomes have stayed high in real terms, owing to a strong pre-crisis growth performance and a job market more robust than might have been feared). The recent immigration has been a positive contribution to consumption. But even the per capita figure for consumption has not decreased during the crisis. This has been possible because, very much in a textbook fashion, Swiss consumers have been able, during times of crisis, to draw on savings that had been comfortably replenished before the storm arrived.
0909  0309  0908  0308  0907  0307  0906  0306  0905  0.0  0 Services  Other Services  Transport services  Rent  Restaurant services  Source: TURKSTAT, CBRT. As I believe that movements of core inflation indicators are essential to better understand the underlying trend of inflation and to evaluate developments more effectively, I would like to further elaborate on these developments. Core inflation indicators maintained their downward trend in the third quarter. By September, annual inflation measured by the CPI excluding energy, unprocessed food, alcoholic beverages, tobacco and gold (H index) became 2.44 percent, while annual inflation measured by the I index, which excludes processed food prices, became 3.37 percent. In this period, although the partial withdrawal of tax cuts on durable goods pushed core inflation indicators upwards, seasonally and tax adjusted data indicate that the underlying trend of inflation is still low (Figure 7 and 8). Here I would like to highlight that the said indicators might increase, albeit modestly, in the upcoming period with the expiration of temporary tax cuts in October.

0206 0506 0806  0609  0409  0209  1208  1008  0808  0608  0408  0208  1207  5  Auto Lo an Inflation Report  5 0  1106 0207 0507 0807 1107 0208 0508 0808 1108 0209 0509 0809  Housing Other Consumer Corporate (rhs)  1.2  * Monthly interest rate on consumer loans, yearly interest rates on business loans. Source: CBRT. Source: ISE, CBRT. Against this background, referring to the partial improvements in labor and credit markets, I would like to remind you once more that the Monetary Policy Committee indicated after the October meeting that a slowdown in the pace of rate cuts would be considered at the next meeting depending on economic data and developments. However, it was also noted that lingering problems across the global economy were still a concern and that uncertainties regarding the strength of the recovery remain. Taking these factors into account, I should reiterate that it would be necessary for monetary policy to maintain an easing bias for a long period of time. 3. Inflation and monetary policy outlook  Distinguished Members of the Press and Esteemed Guests, After summarizing inflation and monetary policy developments in the third quarter of 2009, in this part of my speech, I would like to share with you the evaluation of the inflation outlook and monetary policy of the Central Bank of Turkey in the upcoming period. Firstly, I will briefly describe the economic framework underlying these forecasts.
With regard to legislation, I also believe that further supplementary measures will be needed in future. I will return to this later on. During the recent financial turbulence the Riksbank has not only had regular contacts with other authorities and the political system – we have also had closer contacts with market participants than usual. Central banks around the world have also had close cooperation with regard to reducing the strains in the financial markets in various ways. So what have we at the Riksbank done to make the markets function better? Improving the functioning of the markets The Swedish banks have mainly experienced two problems. One has been the lack of access to more long-term funding in Swedish kronor. The other has been the limited possibilities to borrow in US dollars. As I mentioned earlier, it has been much more difficult and costly for the banks to obtain financing other than at very short maturities. The banks’ possibility to finance themselves is of course important to financial stability. It also affects other interest rates in the economy and thereby the impact of monetary policy. We at the Riksbank try to counteract these effects of the financial turmoil. We have therefore offered the banks financing – against collateral and at an interest rate – at longer durations than normal, and than what is currently available in the markets. We have so far granted loans in Swedish kronor at maturities of three months and six months to a total of SEK 203 billion.

Central banks need to focus on second round effects from inflation, and prevent large but temporary price surges, like those we have seen in very volatile energy and food prices, passing through into other prices, labour costs and inflation expectations. If they do, they could cause a wage-price spiral, which would then stop inflation from falling back to its medium-term target level after the temporary shocks have faded. The interaction of monetary, fiscal and structural policies High inflation is clearly a challenge not only for people, companies and central banks, but also for governments. Europe has recently witnessed significant turmoil in energy markets and governments have tried to find ways to provide relief to households and companies either by direct subsidies or through new regulations in the energy markets. But even before the Russian invasion of Ukraine, it was expected that the green transition would push energy prices up. The signal given by that rise in energy prices was intended to have an important role in encouraging the green transition. The problem now is that not only are energy prices being steered by the green transition, but they have also moved much more sharply because of the extreme tension in geopolitics. We should distinguish between two features of the current problem. The first is that higher prices have undermined purchasing power, increased inequality and made energy intensive industries less competitive. The second is that energy prices have become increasingly volatile, and this in itself is a problem that policymakers need to tackle.