samchain/econo-pairs-v1 huggingface dataset:
It has picked up a little in the recent data as US-China trade tensions intensified, but has also fallen back to below historical averages. This apparent disconnect does not necessarily mean that markets are complacent – the policy uncertainty index might be more sensitive to short-term political developments, while market indices could also be factoring in a belief that monetary policy might be able to offset the impact of shocks. But if market participants are underestimating the extent of political risks materialising, that suggests the potential for sharp price corrections if those shocks do come about. The second risk I want to highlight today, and unarguably biggest risk to the UK economy and UK financial stability, remains that of a Brexit outcome of no deal and no transition. That would have large negative economic effects, both in the Bank’s view and in the views of the businesses we talk to up and down the country (Chart 11). This has been a key focus for the FPC in particular since the Brexit referendum, and we have taken many actions to prepare for and respond to it.

Ecological resilience is becoming increasingly prominent as the world comes to terms with the threat from climate change. In my role as Deputy Governor for Markets and Banking I’ve recently talked about the importance of resilience in the Bank’s operations.2  What I want to focus on today is economic resilience, by which I mean the ability of an economy to withstand and recover from unexpected difficulties – what economists call “shocks”. This is of particular relevance to two of the Bank’s policy committees that I am a member of, the Monetary Policy Committee (MPC) and Financial Policy Committee (FPC). Economic resilience is a subject I first really got  Chart 1: Google searches for “resilience”  interested in when I became Chief Economic Adviser at  Index: 100 = maximum 100  the Treasury in 2007. At this point the UK economy had been growing continuously for 15 years, a period characterised by solid growth, falling rates of unemployment, and low and stable inflation. And a similar pattern had held across other advanced economies. 90 80 70 60 50 40 30  The question economists were asking themselves,  20  including in the UK, was what explained that pattern. 10  Was it just good luck – had the economy been hit by  0 2004 2006 2008 2010 2012 2014 2016 2018  fewer or smaller unexpected shocks than in previous decades? Or was it more down to good judgement – was the economy now, including because of  Source: Google Trends.
Speech  Embargo 17 November 2022, 6.30 pm  Return to positive interest rates: Why reserve tiering? Money Market Event  Andréa M. Maechler and Thomas Moser ∗ Member of the Governing Board / Alternate Member of the Governing Board Swiss National Bank Geneva, 17 November 2022 © Swiss National Bank  ∗  The speakers thank Florian Böser, Lucas Fuhrer and Mico Loretan for their support in drafting this speech. They also thank Dirk Faltin, Cyrille Planner, Michael Schäfer, Jacqueline Thomet and Tanja Zehnder for valuable comments as well as the SNB Language Services for the translations of the text. Page 1/10  Ladies and gentlemen It is with great pleasure that my colleague Thomas Moser and I welcome you to this year’s Swiss National Bank (SNB) Money Market Event in Geneva. We are very glad that so many of you have joined us this evening, be it on site or remotely. Since we last met in this setting a year ago, fighting inflation has become the most important task for central banks worldwide. Many countries have experienced a surge in inflation, the scale and pace of which very few anticipated. A large part of this surge was due to ongoing disruptions to global supply chains caused by the coronavirus pandemic. Russia’s war against Ukraine – in addition to causing immense human misery – has further contributed to inflationary pressures through its impact on energy and food prices.

Peter Praet: Interview in Expresso Interview with Mr Peter Praet, Member of the Executive Board of the European Central Bank, in Expresso, conducted by Mr João Silvestre on 18 June 2018 and published on 23 June 2018. * * *  Is the asset purchase programme (APP) really going to conclude at the end of this year? What we did last week was to express an anticipation that net asset purchases would end at the end of the year. We didn’t say we were now deciding to stop the programme in December. We still have six months to go. We translated the increased confidence we expressed about developments in the economy and inflation into an anticipation about the APP. And, at the same time, we also enhanced the forward guidance on interest rates. But, in any event, to anticipate the end of the programme is to give a strong signal. What exactly do you mean by giving a strong signal? We undertook a careful review of the progress made towards a sustained adjustment in the path of inflation to levels below, but close to, 2%. It was a strong signal because, in spite of a recent moderation in euro area economic growth, we concluded that progress towards our aim has been substantial so far, and actually sufficiently substantial for us to be in a position to express this anticipation of an end to net asset purchases at the end of the year.
As a country, we are trying to rebalance our economy at a time when a global slowdown, and concerns about the solvency of European banks and sovereigns, threaten recovery here in the United Kingdom. Two weeks ago, the Monetary Policy Committee (MPC) decided to resume its asset purchase programme and create new money. Before I set out the reasons for that decision, I want to explain why the global nature of the crisis means that monetary and fiscal policy in the United Kingdom can only do so much. Our fate rests to a considerable extent on the policies pursued by our trading partners. That is why the Chancellor and I put such weight on this interdependence among the major economies at last weekend’s G20 Meetings in Paris. Countries have responsibilities to each other, and we need to work with our partners overseas to find a solution to present problems. Four years into the crisis it is surely time to accept that the underlying problem is one of solvency not liquidity – solvency of banks and solvency of countries. Of course, the provision of additional liquidity support to countries or institutions in trouble can buy valuable time. But that time will prove valuable only if it is used to tackle the underlying problem.

Unquestionably, the key current challenge, is to put under control excessive and persistent inflationary dynamics. Monetary policy decisions, however, have to be considered and made within the following context: Monetary policy takes roughly 18 months to affect the real economy as it is channelled through banks, households and firms and consequently impacts their decisions on credit, consumption and investment, respectively. Therefore, monetary policy does not target current inflation but the medium term inflation outlook. At the current juncture that most of inflation is cost push, stemming from energy and food prices, monetary policy attempts to re-align aggregate demand and aggregate supply so as to contain inflationary pressures. So, monetary policy has a more difficult job than when dealing with the typical demand driven inflationary pressures. Therefore, it requires a balanced approach to contain cost-push inflation but avoid having an exacerbated negative effect on output and unemployment. In addition to the balance I mentioned before, monetary policy decisions have to deal with a lot of uncertainty. The risk of a wage-price increases spiral, even though not yet evidenced in the Eurozone, would exacerbate inflationary pressures. If inflation expectations get de-anchored then inflation will persist for much longer. In such a case the pace of interest rate adjustment as well as the final rate level may have to increase. Currently no material de-anchoring has been observed even though some measures indicate inflation expectations to be slightly above 2 per cent in medium term.
The interest rate expectations of households and businesses have remained in line with the MPC’s limited and gradual guidance (see Charts 3b and 3c). The MPC’s guidance has anchored expectations in financial markets that interest rates will rise at a gradual pace and to a limited extent (Chart 3a). Guidance has dampened the volatility of interest rates, consistent with the expected and actual path of policy rates (Chart 4). Guidance has reduced the impact of economic uncertainty on short-term interest rates (Chart 5). The responsiveness of market interest rates to economic data has generally been higher in the UK than in the US or euro area (Chart 8). While there have been occasions where financial market expectations diverged somewhat from upcoming MPC decisions, these should be kept in perspective. Divergences have generally been modest moves around the exact timing of a few rate increases over the next few years, as opposed to the launch of the sharp tightening cycles of days gone by (6 to 8 rate increases over 12 to 15 months (Chart 3)). Short-term interest rate volatility in the UK has been in line with that in other major economies and is very low relative to th  history, only in the 5 percentile of its historical distribution since 1997 (Chart 9). 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  Inflation expectations have remained well anchored despite a series of major real and nominal shocks. And financial conditions have remained highly supportive, reinforcing the recovery.

Guidance, Contingencies and Brexit Speech given by Mark Carney, Governor of the Bank of England  Society of Professional Economists 24 May 2018  I am grateful to James Benford and Clare Macallan for their assistance in preparing these remarks. 1  All speeches are available online at www.bankofengland.co.uk/speeches  Introduction This evening I would like to discuss potential paths for monetary policy during the next, critical phase of the Brexit process. Note the conditionality of the phrase “potential paths.” The actual path for policy will depend on the outlook for the economy which in turn will depend very much on how the Brexit negotiations evolve. Monetary policy is always contingent on the economic outlook. This is broader than it being data dependent. In order to achieve the inflation target, monetary policy needs to adjust not only to news about current 1  conditions but also to any changes in likely future circumstances. While it may be the MPC that sets interest rates, it is ultimately the economy that determines them. Monetary policy will be most effective if agents can anticipate how policymakers will react to changing conditions. But the predictability of monetary policy can break down when there are large structural changes in: -  Supply capacity;  -  Equilibrium interest rates; or  -  Trading relationships. In such circumstances, forward guidance can help anchor expectations and improve the effectiveness of monetary policy.
Therefore, let us continue our cordial relationship with the financial institutions as we may make our influence felt more effectively through the enhancement of usual interactions with financial institutions rather than through exercising all of the Central Bank’s powers conferred under the Monetary Law Act. Members of financial institutions, we solicit your maximum attention to maintaining the stability of your own institution in order to ensure the overall stability in the financial system of the country. Honourable Minister and distinguished guests, our financial sector consolidation programme is a forward looking programme designed to monitor, identify and track the sources of systemic risk over time to ensure financial system stability. This programme will change the financial landscape of the country by transforming the financial institutions to be stronger and more resilient institutions, which can support the expected quantum leap of our economy. At the same time we encourage them to penetrate regional and global markets. In addition, we expect to develop a vibrant offshore financial market in Sri Lanka and a reputed arbitration centre in Colombo on financial sector issues. By 2020, we expect at least 3 domestic banks exceeding Rs. 2 trillion in asset base and at least 5 banks operating in regional markets, setting the stage to take the economy to the next level of development by 2030.

The geographical proximity and cultural similarities have been reinforced by the diverse strengths that exists in the region. These factors have been important in enhancing the integration process. As this greater regional economic and financial integration is advanced, it will serve as a powerful catalyst for the future expansion of intra-regional trade and investment, creating a self-sustaining and mutually reinforcing economic growth in the New Nusantara region. Ladies and gentlemen: It is my pleasure today to speak on the potential role of an integrated economic and financial platform within the Nusantara region, a region of rapid economic growth in which almost 300 million Muslims resides. My remarks will focus on the potential generated by a collaborative platform and the significance of building linkages between the Nusantara region with other parts of the world. The region's current economic progress, prosperity and financial stability has now accorded us a new strategic window of opportunity to develop new value propositions to unleash the full potential accorded by the accelerating economic and financial integration process. There are already encouraging formal and informal inter linkages between our respective financial markets as well as a higher level of engagement between the respective corporate communities, the market participants and the authorities. A collaborative platform that is based on the diverse comparative advantages of the Nusantara economies can benefit from the complementarities between our respective economies. Essentially, these opportunities will increase the potential to expand markets, increase products lines and deepen the research and development capabilities.
Countries that are more self-sufficient in terms of energy (at least in net terms) do not face the same weakening of activity and inflation in the medium term that stems from the terms of trade channel. In the UK, weighing up the immediate inflationary impact against the potential disinflationary impact in the medium term is central to the baseline projections published by the MPC in May. This framework defines the difficult ‘narrow path’ it has to navigate over its upcoming meetings. Labour market tightness and supply chain disruption Further complications for UK monetary policy stem from tightness in the labour market and the strength of corporate pricing power, at least in some sectors. The tight labour market owes largely to weakness in labour supply rather than strength of labour demand. UK GDP is still only slightly above pre-pandemic levels, despite unemployment rates falling back to the low levels seen ahead of the lockdowns. Higher rates of inactivity among UK workers following the pandemic (on account of early retirement and a rise in long-term sickness), as well as the impact of Brexit on the flexibility and cost of EU workers, appear to have weighed on labour supply. With vacancies and hiring strong, nominal wage growth has increased to rates above those usually deemed consistent with achieving the inflation target. [11] In parallel, firms are striving to re-establish profit margins. As consumer demand weakens, corporate pricing power is concentrated in the business-to-business sector.

Christian Noyer: A central banker’s personal perspective on hedge funds Introductory speech by Mr Christian Noyer, Governor of the Bank of France, at Conference on hedge funds, Washington DC, 15 April 2007. *  *  *  Thank you all for coming. It's a pleasure and a privilege to have you all here to day. Special thanks to the IMF and John Lipsky for organizing this event for us and with us. The purpose of our meeting is to present the special issue of our Financial Stability Review on hedge funds. So I want to say a few words on why we embarked on such a project and how we did it. As you noticed, this issue of our Review is mostly based on external contributions. Some authors are with me to day and I also want to thank them. We are very happy that we could assemble such an eminent roster of contributors. Let me say from the outset that we did not intend to reach a conclusion at this stage. The international community is working on this issue, in particular in the framework of the FSF. The main question is: how can we best reconcile keeping the positive inputs of this activity for financial markets functioning and innovation, while keeping the risks that may be generated for financial stability to a minimum. This is why there is a debate on hedge funds, which we think, is legitimate.
Additionally, better education and training help to reduce mismatches in the labour market and allow for a smoother reallocation of workers between sectors and firms. 15 The last decades have already brought about an enormous increase in the level of educational attainment, the so-called “catch-up effect in education”. In the euro area, according to OECD data for 2003, an average of 73% of those aged 25-34 had attained at least upper secondary education, compared to only 46% of persons aged 55-64. 16 Nevertheless, meeting the challenges of technological progress  11  See also ECB (2006), ibid. 12  See the World Bank web site www.doingbusiness.org. 13  See the World Bank web site www.doingbusiness.org. 14  European Commission (2004) “A 3% R&D effort in Europe in 2010: an analysis of the consequences”, study prepared by the Research Directorate General of the European Commission. 15  See G. Schwerdt and J. Turunen (2005): “Growth in euro area labour quality”, ECB Working Paper Series, No 575, January 2006. 16  OECD (2005) “Education at a glance”. 4  BIS Review 44/2006  and ensuring the labour force’s employability and flexibility, requires that human capital is continuously adjusted to labour market needs through improved education and training as well as lifelong learning. In 2005, the US annual expenditure on higher education institutions per student was 22,234 USD, while in the euro area the equivalent of only about 9,200 USD was spent. Furthermore, we need more high quality scientists and researchers.

Remarkably, employment growth in the euro area showed resilience to the economic slowdown at the beginning of this decade, with employment growing on average by 1.1% over the period 2000-2005, compared to 0.9% in the US. However, the employment rate in the euro area remains low by international standards: for example, the employment rate was 71.2% in the US in 2004 3 and the unemployment rate clearly too high compared with, for example, the unemployment rate of about 5.0% in the US in 2005 4 . Furthermore, since the launch in 2000 of the Lisbon strategy, the annual growth rate for the euro area has averaged 1.8% per year (compared to 2.8% in the US), thus remaining behind its main competitor. When comparing the euro area’s economic performance to the US, there is evidence of increasing disparities in growth. Since the beginning of the 1990s, the gap in per capita income growth between the US and the euro area has continuously widened - by 0.8% on average per year during the 1990s, increasing to 1.3% per year from 2002 onward. The main explanatory factor behind these developments is the diverging trend in hourly labour productivity growth between the euro area and the US. During the 1980s, hourly labour productivity in the euro area grew on average by 2.4% compared to 1.3% in the US. In the 1990s, hourly labour productivity in the euro area increased on average by 1.8%, decelerating to 1.2% in 2000-2004.
I have talked about why this is the case many times in recent years and I therefore do not intend to go into it in more detail here today.4 Briefly, however, what is at issue is this: since nominal interest rates include compensation for inflation, these interest rates will be lower, on average, in a low-inflation economy. Moreover, there is an effective lower bound for the policy rate, where the positive effects of further reductions cease and the negative ones begin to dominate.5 This means that there is less scope for lowering the interest rate to stimulate demand in economic downturns. In addition, since expected inflation is lower, it is also more difficult to achieve as low a short-term real interest rate as would be needed to have a sufficient effect. One consequence of this that is worth noting is that, with inflation more persistently below 2 per cent, negative policy rates would become more common. Those who are critical of a policy rate below zero should therefore be strong advocates for maintaining confidence in the inflation target and thus also for a monetary policy that strives to achieve the target. …which is reflected in the strategy reviews of the Federal Reserve and the ECB The problems of persistently too low inflation play a central role in both the ECB’s strategy review from July this year and the US Federal Reserve’s review from August last year. The changes that were made clearly show a wish to avoid these problems.

A common view is that monetary policy is in the driver’s seat The practical application of macroeconomic policy under this policy regime is often described as a situation in which monetary policy is sitting in the driver’s seat and is expected to play the active part in stabilisation policy. It is monetary policy that is expected to keep the economy in balance and inflation stable. Fiscal policy is perceived to have a more passive role, which in principle is restricted to adjusting taxes and expenditure when this is necessary to keep public debt stable over the long term.9 It is not considered to have any explicit stabilisation policy task, other than that which follows from the automatic stabilisers, except possibly in the event of deep recessions or crises. This view has had a major impact throughout the world, both in academic research and in policy departments at finance ministries and central banks. Conducting macroeconomic policy with this division of roles has also worked relatively well in most places, not least in Sweden. It has thus been an arrangement with which most people have been pretty content. The division of roles may no longer be so obvious But perhaps it is time for us to begin to ask ourselves whether this division into an active monetary policy and a more passive fiscal policy really is the best way to achieve a favourable macroeconomic development in all situations. Perhaps the division has been taken a step too far after all, given that certain circumstances have changed.