samchain/econo-pairs-v1 huggingface dataset:
There were risks of the crisis’ effects being greater than assumed in the main scenario in June, so that weak demand and low inflation in the rest of the world would lead to an even lower price rise in the Swedish economy. All in all, these considerations meant that in the June report the Riksbank’s overall assessment of inflation in the coming years was adjusted downwards. As the rate of inflation twelve to twenty-four months ahead was judged to be below the target, the Riksbank considered that, at least for a time, there was room for a somewhat more expansionary monetary stance. The repo rate was therefore lowered 25 basis points. 4. What has happened since the June report? Let us now look at what has actually happened since the beginning of the summer. Low pressure from international prices During the summer the Asian crisis has got worse and the uncertainty about its future course seems to have grown. More countries in the region are now expected to show a fall in output during the year. One of the main factors behind the deterioration is the weak Japanese economy. The knock-on effects of the Japanese crisis in other parts of the world are highly uncertain, as is the outlook in such countries as Russia and China. An impact from the Asian crisis is now discernible in economic growth in the United States and the United Kingdom.

BIS Review 66/1998  -3Notwithstanding the prospect of further good economic growth in the coming years, the Riksbank judged that the rate of inflation would remain low and even be less than we had expected earlier. The strong demand was certainly assumed to give some increase in inflationary pressure in the forecast period but not so much as to be a cause for concern. One reason lay in the good productivity growth that was also foreseen, indicating that full capacity utilisation in the economy would not be reached in the coming twenty-four months. Although capacity utilisation was high in certain sectors, the Riksbank envisaged that in the economy as a whole there would be a capacity surplus. External inflationary pressure was expected to be low in view of subdued international inflation, low raw materials prices and a somewhat stronger exchange rate. Expectations of future inflation among households, financial agents and manufacturing indicated a belief that future inflation would be low. Thus, confidence in economic policy’s focus on price stability seemed to have been firmly established. The Riksbank noted that the uncertainty in the assessment of future inflation was mainly whether it would be even lower than we foresaw in the main scenario. One of the main factors here was the crisis in Asia and its conceivable effects on international economic developments and prices.
Chart: Oil investment and spending of petroleum revenues Most of us might say that the economic winter has been fairly mild so far. This is partly because the economy has been provided with ample fuel. When oil prices started to fall, the economy had for several years enjoyed both strong growth in oil investment and fiscal spending of petroleum revenues. Oil investment has since declined, while government spending has continued to rise. Spending of oil revenues has increased by about as much as oil investment has fallen since 1/9  BIS central bankers' speeches  2013. Chart: Key policy rates Monetary policy has also made a substantial contribution. An already low policy rate was cut further. The key policy rate has now been kept at a record-low 0.5 percent for close to a year. In our neighbouring countries, interest rates have come down to even lower levels, but in real terms the interest rate level has been lowest in Norway. The krone exchange rate fell in tandem with the oil price and led to higher prices for imported goods, resulting in a temporary increase in inflation. Since there is confidence that inflation will remain low and stable, we have been able to disregard that increase when setting monetary policy. The social partners have shown wage restraint. The krone depreciation has thus translated into a marked decline in relative labour costs, which has helped strengthen the position of Norwegian firms exposed to international competition.

Inadequate pricing of emissions is one of the culprits. An international emissions trading system covering all countries could, in principle, provide for equal pricing of emissions. In practice, this has proved difficult to establish. Getting developing countries to sign on to such an agreement is understandably difficult. It is hard to demand that the polluter pays in countries where much of the population is still below the poverty line. The transition to low-carbon technologies in emerging markets is, however, essential for reaching global emissions targets. The pricing of emissions also encounters opposition in rich nations. Some would argue that higher emissions taxes will simply cause emitters to move elsewhere. This argument may be relevant for some sectors. But there is also opposition from groups who consider themselves better served by financial support to make changes rather than having to bear the costs themselves. For the political authorities, subsidies may therefore appear a more attractive option. The result is a more costly and less effective climate policy. Chart: Price of emissions Norway was among the first countries to introduce a carbon tax. In addition, several industries are covered by the EU emissions trading system. But a glance at the cost of carbon emissions in Norway shows that even here we have a long way to go before the principle of equal pricing of emissions is realised. Some sources of pollution are completely exempt.
Under the so-called Solidarity Alternative, or wage moderation policy, the social partners were to ensure moderate wage growth and competitiveness. The authorities promised to deliver a stable krone. Structural reforms were implemented to increase growth capacity. Confidence in monetary policy gained a firm footing and inflation and the real interest rate declined. But the regulatory pendulum that swings back and forth was still in motion. In the period up to the turn of the millennium, petroleum revenues were on the rise and fiscal policy came under pressure. The fixed exchange rate regime amplified fluctuations in the economy and the social partners were no longer able to rein in cost growth. The Solidarity Alternative had played its role. Unexpected growth in petroleum revenues also highlighted the importance of designing a long-term government savings plan. We needed a new anchor for both fiscal policy and monetary policy. Chart 5: Inflation. Moving 10-year average and variation in CPI. Per cent. 1980 – 2010 Report No. 29 from 2001 sets out long-term guidelines for economic policy. The division of responsibility was further clarified. Norges Bank was given a clear responsibility for keeping inflation low and stable. The government and the Storting can build on Norges Bank’s response pattern when drawing up annual budgets. They can also take into account that increasing spending via government budgets may trigger an appreciation of the krone.

Someone has to pay the bill. The rapid growth in government debt in Europe and the US is consistent with a well known historical pattern. Fiscal policy was used actively in most countries to curb rising unemployment. The mistakes of the 1930s were not to be repeated. The intention was good and the policy was most likely appropriate, but weak public balances became even weaker. On top of this, some countries provided substantial government funding to banks. The situation came to a head in several euro area countries, initially in Greece, which had allowed deficits to creep up during the growth period. In the next round, Ireland, Portugal and Spain came under pressure and had to payer higher interest rates on new loans. The UK also ran a government budget deficit in the favourable pre-crisis years and when tax revenues rapidly declined and social security spending rose, the deficit increased to more than 10 per cent of GDP and government debt doubled. The authorities in many countries must now tread a difficult balance. Controlling debt requires an economy with a back strong enough to carry it. It is not certain that low interest rates are sufficient to sustain the nascent recovery if fiscal policy is tightened. Credible  2  BIS central bankers’ speeches  reforms that limit public spending in the long run, combined with moderate tightening in the short run, could be an appropriate strategy. Governments that saved during the expansion may have the scope for pursuing that approach. Greece did not save.
There are promising signs, among business and regulatory sectors, that there is a growing space for captives to play a role. It is important that we move forward to harness this potential, responsibly and thoughtfully. 4/4  BIS central bankers' speeches

In 2022, inflation rose initially on the back of the rapid surge in prices of import items, in addition to an ever increasingly strong aggregate demand and an overall upswing in costs of production. However, inflation trend recorded a turning point in October 2022, declining progressively onwards at 4.7% in May 2023. This performance reflected the dynamics of prices in global markets, the first effects of our monetary policy's reaction, - which I will elaborate on in more detail below, - and the appreciation of the exchange rate. Also, the relatively low inflation rate in Albania was also backed by the contained electricity prices for households and some businesses, thus transferring the increased cost in energy imports to the public sector's balance sheets. Year 2022 marked progress in terms of improving the external position of Albania as well. More specifically, the Albanian exports grew by 42% over the past year, driven by the rapid growth in tourism income. This growth led to the reduction in both the trade deficit and the current account deficit. In parallel, external debt of Albania declined while its sustainability indicators improved. The improvement in the balance of external trade, the high levels of foreign direct investments coupled with the stability of the domestic financial markets, drove to the strengthening of the lek exchange rate during the past year. These trends seem to have continued in 2023 as well.
Now the point of all that was not just to help me decide how I should vote in the MPC next month! It was to distinguish two distinct issues relating to monetary policy that I want to discuss over the next few minutes. The first is the objective of monetary policy - what it is that we, in the MPC should actually be trying to do. And that objective couldn’t be clearer. It is to achieve - on average and over time - a target rate of retail price inflation, of 2½% on the RPIX measure (i.e. excluding MIPS), as set by the Chancellor of the Exchequer. 1  BIS Review 18/2000  I suppose it might just be coincidence, but since we adopted inflation targetting as the objective of monetary policy, towards the end of 1992, our economy has performed remarkably well. In fact over the past 7 years we have enjoyed the longest period of sustained low inflation we’ve known for a generation. Retail price inflation - on the Government’s target measure - has averaged 2.7% over that time. That’s just about 2% on the European standardised HICP measure of inflation and on that measure our inflation rate is currently the lowest in Europe at 0.8%. Alongside low inflation we’ve also had the lowest nominal interest rates that most of us can remember. Short-term rates have averaged some 6¼%, (fluctuating between 5 and 7½% over the period) compared with some 11¼%, (fluctuating between 7 and 15%) over the previous decade.

However, there is a risk that African countries could become the biggest casualties of a crisis they did not create. The impact is already severe and has dealt a huge shock to our continent while posing a great threat of reversal to the hard earned social and economic gains that most of our economies had achieved in the recent past. Ladies and Gentlemen, for more than a decade, most African countries had continued to register unprecedented economic growth rates averaging 5% and above. We saw a rise in income levels and a reduction in poverty among our peoples with improved education,  BIS Review 44/2009  1  health, water and infrastructure development. The continent also experienced a surge in investment flows in many sectors including mining, manufacturing, tourism, transport and construction. Progress in governance and accountability had also been noted in most African countries. Mr Chairman, allow me without pre-empting the deliberations to mention some problems the global financial crisis has created for most African economies. Commodity exporting countries have experienced a decline in their export receipts. This has been due to the decline in commodity prices reflecting the weak demand of such commodities arising from the scaled down output in industrialised and emerging market countries. The declining export earnings as well as changing investor sentiment toward investing in emerging markets, which has been reflected in the reversal of investment flows, have been exerting pressure on the exchange rates.
I am not going to go into details tonight about the precise economic mechanisms which make overnight market rates converge on Bank Rate, but there is plenty of technical material available on that if you wish to know precisely how that works.7 In my first week as Markets Director of the Bank of England, in March 2009, we set Bank Rate at 0.5% where it has remained ever since; a record low for the policy rate in the Bank’s history of over 300 years. Since that left little scope to adjust the price of money downwards directly, we switched at that point to directly affecting the supply of narrow money. The Asset Purchase Programme – more popularly called “Quantitative Easing” or just “QE” – has since reached of total of £ the vast majority of which has been by purchasing gilts, financed by increasing the supply of reserve balances (net of other flows across the Bank’s balance sheet – see Charts 1 and 2). The economics of QE is actually more simple than is often portrayed: by buying a large amount of assets from the market, in exchange for cash, we can greatly increase the amount of sterling in the economy. We inject the most liquid asset of all – short-term sterling reserve balances – and take out of circulation a long-maturity, less liquid asset, gilts. That switch in maturity and liquidity leads to a range of effects, as the economy has to rebalance its holdings of financial assets.

Caleb M Fundanga: The effects of the crisis on Africa Remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the African Economic Research Consortium Senior Policy Seminar (SPS XI), Lusaka, 6 April 2009. *  *  *  The Executive Director, African Economic Research Consortium; Government and Central Bank Officials present; Distinguished Participants; Members of the Africa Economic Research Consortium; Ladies and Gentlemen. It is with great joy and gratitude that I welcome you all to Zambia and to this seminar. I wish to extend a warm welcome to all the international participants. I hope you will have a good stay in our beautiful and friendly city of Lusaka. I feel particularly honoured and grateful to officiate at this important seminar organized by the Institution I am proud to be associated with, the Africa Economic Research Consortium (AERC). Chairperson, let me begin by thanking you and AERC for choosing Zambia to host this important seminar. I am aware that since its establishment in 1988, the AERC has played a pivotal role in developing and harnessing resources in Africa both informational and human capital. Research, workshops and seminars such as this one have helped to strengthen the capacity of undertaking policy–relevant research into the problems facing the management of economies in sub-Saharan Africa. It has, through these interventions, undoubtedly contributed to the positive strides African economies have scored in the last decade with regard to economic governance and development.
For example, in avalanche areas the snow may be “seeded” so that, by inducing small avalanches, the chance of a large avalanche is mitigated. And in fire-risk areas, controlled burns or fire breaks are sometimes used to limit the risk of a large fire. In the context of the financial system, policymakers could impose a “Glass-Steagall” style separation between the payments system network and risky activities. Actions can also be taken to mitigate the impact of a bad outcome. For example, this might mean building an avalanche net or fence; funding a fire-fighting service; or launching a lifeboat. In the context of financial regulation, this might entail reducing the costs associated with resolving financial institutions, for example by requiring banks to develop resolution and recovery plans, or requiring forced subsidiarisation of foreign bank branches. As always, however, there is the risk that such interventions can have unintended consequences: shortly after the Titanic sank, a steamer, the S.S. Eastland, capsized on Lake Michigan, with the loss of around 850 lives, because it had been destabilised by the extra lifeboats required by post-Titanic regulations! 4. Decision making under uncertainty and the role of beliefs  The analogies between economics and science can be taken only so far. A key difference between economics and the physical sciences is the role played by active decision-makers – such as households and businesses – whose presence complicates substantially the dynamics of the system.

Therefore, with inflation running at 16-20 percent in the Baltic States, interest rates became strongly negative in real terms and the monetary policy procyclical, boosting consumption, while the fixed exchange rate has discouraged production. Basically, the main weakness of the currency board, namely the inability to respond to exogenous adverse factors, pushed the economies of those countries towards a hard landing. Let's look now at the picture in Romania. Our exchange rate regime, featuring a flexible exchange rate in a managed floating system, allowed the market to correct the overappreciation the leu had registered at a certain point via its own mechanisms, and the BNR was able to raise interest rates – which it did seven times already over the past 10 months – in order to permanently keep them in real-positive territory and curb inflation which had been triggered by the same external factors that affected the countries you have mentioned before. The BNR has even moved forward in order to slow down consumption and maintain a healthy portfolio for commercial banks via the recent prudential measures  BIS Review 113/2008  1  regarding loans to households. All these have significantly contained the risk of a hard landing for the Romanian economy, even if such a risk still lingers as long as the gap between the current account deficit and its financing via FDI remains significant. Nevertheless, the foreign analysts that included Romania in the group of the five countries exposed to a hard landing had substantiated their opinion. Are they completely wrong?
Going negative has sharply lowered and flattened the yield curve in the euro zone, which is especially relevant given the importance of long-term financing. And so far the substitution for cash has also remained negligible. Yet, there are limits on how far one can go. Thus lower key interest rates should be combined with other non-conventional measures. In short, CBs have innovated a lot, both in terms of rates and quantities. We knew CBs could do a lot and they have actually done a lot, even if they cannot do everything. In the main advanced economies, the precise macroeconomic effect of large-scale asset purchases is still under discussion. But I can summarize the Eurosystem’s shared analysis and Mario’s recent statement: our purchases will add around half a point to inflation in 2016 and almost the same to growth. In the US case, the QE2 launched in late 2010 is the most similar to our QE. Controlling for its size, roughly half of ours, it has had a broadly comparable impact, even if published estimates differ somewhat. Fourth challenge: how to deal with the risk of a mismanaged exit from the ZLB and financial instability? Staying too low for too long would be counterproductive: ultra-low margins may discourage financial intermediation and lending to the real economy, while addiction to forward guidance may silence contrarians and hamper market information on fundamentals. Yet the exit may be bumpy and, hence, postponed or even aborted.

Some economists have called for adjusting the inflation target, although in opposite directions: a few have argued for a higher target to avoid testing the Zero Lower Bound often (ZLB); others have called for a lower target, assuming lowflation is the New Normal. In both  2  BIS central bankers’ speeches  cases, hasty changes may only affect the CBs’ credibility and the expectation channel of monetary policy. We have more flexibility on the target horizon. This is the medium term and should not be confused with the 3-year horizon of the forecasts published by the ECB for instance, which may fall short of the target level; what matters is being on a path that is consistent with this medium-term mandate. Forward guidance and the announcement that rates will be “lower for longer” should provide reassurance over the CB’s determination to do “whatever it takes” to fulfill its mandate within this mandate. True, uncertainty about the causes of lowflation and low rates leads to uncertainty over the neutral rate and the need for accommodation; but the more uncertain our environment, the more important and useful it is that we be clear and predictable in order to reduce this uncertainty. According to simulations carried out within the Eurosystem and the BDF, clarifying that the future stance will remain accommodative for many years enhances the efficacy of Quantitative Easing (QE). Third challenge: how effective can non-conventional monetary measures be? The ZLB has proved not to be the effective lower bound.
Naturally, a booming economy, with a widening current account deficit, persistent appreciation and low inflation may need some stabilization if the expansion is deemed to be unsustainable. Fiscal policy could help, but unfortunately it is not always available, especially in countries with a weak fiscal history. Another tool, with weak evidence supporting its  2  For further discussion on the use of monetary policy to affect asset prices, in particular in the context of inflation targeting in open economies, see De Gregorio (2010b). 3  In economies following inflation targets is important that the intervention be coherent with the inflation outlook to avoid undermining credibility. Intervention can also be part of unconventional policies to reach the inflation target when interest rates are close to the zero lower bound. BIS Review 124/2010  3  effectiveness, is capital controls. 4 Regardless of whether they are effective or not, they may hide policy distortions. For example, policymakers thinking that capital controls are effective at insulating the economy from capital inflows, may tighten monetary policy to slowdown the expansion, but instead induce further inflows that look for loopholes to avoid the controls. For this reason I think that a more promising avenue is to look at the impact of capital inflows on financial stability. Indeed, many of the booms in asset prices and activity that come with capital inflows are caused and amplified in the financial system. Capital inflows and financial stability From the macro point of view, I have emphasized currency risks associated to capital inflows.

141–156. IMF (2010), Global Stability Report, April, International Monetary Fund, Washington DC. Ostry, J., A. Ghosh, K. Habermeier, M. Chamon, M. Qureshi and D. Reinhardt, “Capital Inflows: The Role of Controls”, IMF Staff Position Note, SPN/10/04. 10  BIS Review 124/2010