samchain/econo-pairs-v1 huggingface dataset:
This leads to increased price competition and to inflationary pressures being lower temporarily. But despite the rapid technological changes, the productivity growth figures have fallen both in Sweden and abroad. 3 We are becoming increasingly aware of the problems linked to climate change. This also contributes to changing our consumption and production patterns. The adjustment to such changes may be difficult and may also lead to the measured GDP growth being lower. But this adjustment can also in many ways lead to new markets and new opportunities opening up and to new, large-scale investment needs arising. Why are economies slowing down now? We would normally believe that structural changes occur slowly and that they therefore should not be behind a rapid change in the sentiment of the economy. But there are nevertheless many indications that the subdued economic growth and the rapid fall in confidence shown by the indicators over the past year have several links to the structural changes. When the number of trade barriers increases, the opportunities to benefit from economies of scale and international specialisation decline. The uncertainty regarding the rules for international trade dampens the willingness to invest. The uncertainty regarding future regulations and taxation of, for instance, diesel and petrol driven cars reduces demand for them. The intensive discussions on the climate impact of air travel may dampen demand for air travel. In Sweden, for instance, travel by domestic flight has declined. Monetary policy cannot affect these structural changes or ensure that we attain a certain level of economic growth.

Monetary policy must reduce the possibility of passing on these costs in order to keep inflation at bay. This is done partly by keeping growth in demand for goods and services under control. In addition, a strong krone may boost imports of goods and services previously reserved for domestic producers. In rural areas and towns, where local government employment is an alternative to working in agriculture, fisheries, local services or small-scale industry, the public sector with its nationwide agreements can be a wage trend-setter. Wage growth in the public sector can therefore be an important source of higher inflation. In the public sector, higher labour costs due to costly income settlements can only be passed on to customers to a limited extent. On the other hand, the rise in costs can intensify pressures to increase government allocations. Most likely, the central government will be expected to pick up the bill when labour costs rise sharply. In the business sector – with its profitability requirements – higher labour costs must be matched by an increase in productivity. In principle, the central government will apply the same requirements to government agencies. How these requirements will be met in practice will have a decisive impact on developments in central government expenditure and, consequently, on interest rates and the krone exchange rate.
Regional Network surveys normally include supplementary questions on special topics, and over the past year, many of the special topics have concerned prices. We think they give us better insight into price drivers than the standardised questions we asked previously. We will continue to ask network contacts about prices when relevant, such as in the upcoming survey that will be published in March. If we learn that some of these questions adequately capture future price increases, we can include them in our regular questionnaire. It is also useful to look at similar surveys in other countries, as Norges Bank Watch points out. Norges Bank Watch discusses monetary policy trade-offs in an environment of high inflation, and whether the costs of high inflation after a cost-push shock are exaggerated in our modelling system. They point out that an optimal monetary policy response depends on the nature of the economic shock and the transmission of monetary policy. At the same time, the cost of high inflation must be measured correctly. Let me first say that these are the very questions that have featured in the discussions of our Monetary Policy and Financial Stability Committee over the past year. Among other things, we have devoted considerable time to assessing the effect of higher interest rates on household disposable income and the relative importance of the nominal and real interest rate. The results were also presented in a box in the June 2022 Monetary Policy Report.

To date, 109 approved projects have received financing worth RM1.5 billion by 22 banks, of which 17 projects are receiving financing worth RM300 million from six Islamic banks . For the first 9 months of 2013, 33 companies received approved financing facilities totaling RM416 million. The  2  BIS central bankers’ speeches  approval rate for the financing has also improved from 54% in December 2012 to 59% in September 2013, reflective of the positive reception of financial institutions towards green technology financing. The recipients of the financing facilities operate in a broad range of green technology sub-sectors that covers energy, buildings, transportation and water and waste management. This financing initiative has also contributed to increasing employment, with the generation of nearly 1,400 jobs. The additional allocation of RM2.0 billion of the GTFS therefore presents an opportunity for financial institutions, including Islamic banks to further expand financing into this new and exciting area of growth. Strong potential for Islamic finance to support green technology This brings me to my next point – the role of Islamic finance in contributing towards a diverse and robust financing ecosystem for green ventures. In the Quran, verses 11 to 14 of Al-Fajr emphasise the need to care for the environment and the forms of life that Allah has created on this earth that includes proper usage of natural resources.
On any changes in view about how the economy works (about the ‘model’). And it will depend on whether the central bank’s beliefs about agents’ inflation expectations are (broadly) accurate. In other words, the outlook for policy is unavoidably state contingent, and those contingencies include the possibility of the policymaker discovering that it had not been as credible as it had assumed. Communicating that state contingency in the form of a series of interest-rate paths would be formidably difficult. It is not obvious to me that a 21 fan chart for the interest rate delivers this unless accompanied by a clear explanation of what states of the world would take the central bank’s rate to different parts of the fan. So the question boils down to how the policymaker’s reaction function can best be conveyed. At the Bank of England, we have tackled this by publishing as complete an account as we can of our analysis of the economic outlook, including the risks. In the minutes of our meetings, we describe how those risks feature in our policy judgments. And individually, we explain the reasoning behind our decisions and our view of the outlook in Select Committee appearances, speeches, etc. The underlying question here is whether a more effective communication policy is based on explaining the underlying analysis or on providing what many might wrongly perceive to be the ‘answer’ in the form of a path for rates.

To be able to assess monetary policy during a certain year, it is important to remember that such considerations also lie behind the decisions. In order to gain a picture of the initial situation for a certain year, it is necessary to study the course of inflation in earlier years. The fact that inflation has been allowed to deviate from the target may be due to poor monetary policy decisions. But it may also have been part of a deliberate strategy by the Riksbank to be able to balance production and employment. If we do take such considerations, we shall however have clearly explained this in connection with our decisions. So how did it turn out? After this general discussion, allow me to conclude with a very brief description of the considerations that monetary policy faced during the assessment period. The development we envisaged in 2005 and 2006 was that economic activity would continue to strengthen. Cost pressures and resource utilisation were expected to rise gradually, but a strong development of productivity was nonetheless assumed to hold back inflationary pressures. The most important consideration was the rate at which the repo rate should be raised. It was a question of the low inflation rate initially rising towards the target, but in a way that did not involve a risk of an overly rapid increase in the rate of inflation later on. At the beginning of 2006 we began a phase with increases, which continued in 2007.
The wave of modernization that has swept over almost all central banks in 1990s and in the new millennium is a testimony to this new trend. Hence, John Exter still lives in the core of the hearts of central bankers throughout the world and will continue to do so in the foreseeable future as well. BIS Review 92/2007  9

There would be risks to output and inflation in the medium term if we were to allow inflation of domestically produced output to rise above target unless we were confident that falls in import prices would indeed continue for some years. The lesson that we should not place excessive weight on one month’s figures is as true of inflation as it is of retail sales. In December CPI inflation was 1.6%. Three months ago it was 1.1%. Six months ago it was 1.6%. Yet the broad outlook for the economy - a central view of continuing steady growth with low inflation - changed rather little during the period. The MPC cannot fine tune short-run movements in output and inflation. When the MPC published its Inflation Report in November, some commentators said that inflation was seemingly stuck at around 1%, and that if growth were to continue at around trend then it was difficult to see why the Committee’s central view was that inflation would pick up to the 2% target looking ahead around two years or so. Since then inflation has risen by half a percentage point in only three months. Stating the point in that way shows how silly it is to place so much weight on small changes in inflation and small deviations of inflation from target. The appropriate response by central banks is to examine all the economic data, and to focus on the outlook for inflation in the medium term. That is exactly what the MPC will continue to do.
Figure 15: Interest Rate Developments (Percent) 26  21  16  BondTahvil yieldsve Bono Piyasası Faiz Oranı IMKB (gösterge niteliğinde, bileşik)  11  CBT Policy Rate (compound)  0909  0709  0509  0309  0109  1108  0908  0708  0508  0308  6  0108  TCMB Gecelik Faiz Oranı (bileşik)  Source: ISE, CBRT. 6  BIS Review 143/2009  Market interest rates in all maturities are declining. It is noteworthy that long-term yields declined more than shorter-term yields and displayed a flatter yield curve (Figure 16 and 17). Figure 16: Yield Curves*  Figure 17: Difference Between LongTerm and Short-Term Interest Rates*  (Percent)  15  28.July.2009  10  01.October.2009  9  Release of the July Inf lation Report  13  7  Yield  8  6  11  5 4  9  3  0.5  1  1.5  2 2.5 Term  3  3.5  1009  0909  0809  0709  0609  0509  0409  0309  7  0209  0109  2  4  * Estimated by using the compound yields on the bonds in the ISE Bonds and Bills Market, based on the Extended Nelson-Siegel (ENS) method. *Difference between interest rates with 4-year and 6month maturities of the yield curve estimated by ENS method, 5-day moving average. Source: CBRT. Source: CBRT.

Figure 28: Total Aggregate Domestic Demand (Seasonally Adjusted, at 1998 Prices, Billion TL) 28 26 24 22 20 18 16 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3* 2003  2004  2005  2006  2007  2008  2009  *Forecast. Source: TURKSTAT, CBRT. Data pertaining to the third quarter indicate that external demand remained weak and the negative contribution of net exports to quarterly growth persisted. The course of external demand will be determined by the outlook of the speed and timing of global recovery. The medium-term outlook for global growth indicates that the GDPs of developed countries would not reach the pre-crisis level for an extended period of time. Within this framework, external demand is expected to continue to suppress aggregate demand for quite some time (Figure 29). 12  BIS Review 143/2009  Figure 29: Actual and Forecast GDP Growth in Developed Countries (Seasonally Adjusted, 2008Q2=100) 104 102 100 98 96 94 92 90  USA  Eurozone  Japan  England  88 86 2  3  4  1  2  2008  3  4  1  2  2009  3  4  1  2010  2  2011  Source: Consensus Forecasts, September. In the June-August period, non-farm employment increased for the first time since the second quarter of 2008, in seasonally adjusted terms.
At the moment our legislation lags behind global practices. We understand what an urgent topic this is, and in order to make our economy more attractive to investors there should of course be effective mechanisms in place to counter insider trading and market manipulation. The next important issue is the bill concerning a financial Ombudsman for the rights of consumers of financial services. Recently at the State Council Presidium there was discussion about rights protection for consumers of financial services, and, of course, a financial Ombudsman could be one of the instruments used to increase the effectivity of consumers’ rights protection. We propose to bring this in gradually. And here, too, I hope I can count on support for this project from the Ministry of Finance and the government and state Duma as a whole. These bills are in the process of being finalised before submission to the state Duma. Firstly, for us it is important that a bill toughens liability for false statements in the financial sector. We are carrying out major work on improving the cyber resilience of financial organisations and combatting cyber attacks. So it is important for us, taking into account the benefits of digital technology development for the financial sphere, to provide an adequate level of security and protection from risks. Therefore it is necessary to amend the law in order to establish legal requirements for the protection of financial organisations’ information and to combat theft of their clients’ funds. We are now working on drafting this bill, too.

When making decisions about monetary policy in March, we were considering the possibility of continuing to reduce the key rate in the second quarter, if the economic situation develops in accordance with our forecasts. In March inflation went down to 4.3%, and according to assessments on 17 April inflation has already fallen year-on-year to 4.1%, which is very close to target. The rate of inflation going down more quickly gives us room to reduce the key rate as early as April. I would even suggest that at the next Board of Directors’ meeting, set to take place in a week, there may be discussion about lowering the rate from between 25 to 50 basis points. In general, when carrying out monetary policy, we will be sticking to a careful and considered approach, taking into account risks and uncertainties, including movement in the behaviour of oil prices, and we will be keeping monetary policy moderately tight in order to keep the rate of inflation at around 4%, and to foster the reduction in inflation expectations. The strategy of fiscal consolidation elected by the Ministry of Finance, along with the planned reduction in the budget deficit, will enable stabilisation of state finances. From the point of view of monetary policy, for us it is important that the elected strategy limits inflation risks arising from fiscal policy. Fiscal policy impacts on monetary policy and vice versa, therefore it is important for us to have a regimen of ongoing consultation on this issue.
If we were to decide that the existing state of affairs is not acceptable in financial stability terms, there are two broad paths we could follow. The first option would be to take steps to curtail the extent of short-term wholesale finance in the system. In principle, regulators across a broader set of institutions and markets could take steps to directly limit the use of short-term wholesale funding to finance longer-term assets, and take actions that reduced the amount of maturity transformation associated with securitization markets. In other words, regulators could require that a greater proportion of market-based finance be funded by longer-term debt. Alternatively, additional legislation or regulatory changes could be implemented to reduce the volume of wholesale-funded, capital markets activities. It is also true that some of the measures under debate in the area of limiting the scope of activity or the scale of certain financial institutions, three of which were explored by my colleague Federal Reserve Governor Dan Tarullo in a recent speech, would likely have the effect of reducing the use of short-term wholesale funding relative to the current status quo.17 For example, if regulators were to cap the size of a bank’s overall liabilities relative to gross domestic product (GDP) not only would this have the effect of capping the size of individual firms, but it also would likely limit the use of short-term wholesale funding by the largest institutions.

As the concerns about the U.S. housing market escalated in 2007, participants in the tri-party repo market became increasingly concerned about the liquidity and credit risks that they faced. The clearing banks became uncomfortable with their large intraday exposures to their tri-party securities firm customers. After all, if a securities firm were to fail suddenly, the clearing banks could be stuck with huge loans to these counterparties, secured by securities that were not necessarily high quality and liquid. Thus, as the condition of the most troubled securities firms deteriorated, there was a risk that one morning a clearing bank might decide not to unwind a firm’s tri-party transactions in order to avoid a large intraday exposure. 6  The problem was particularly acute for those firms with large securities trading and over-the-counter derivative businesses operated outside of depository institutions. In the United States, even those securities firms that were part of bank holding companies were vulnerable because Section 23A restrictions in the Federal Reserve Act that govern transactions between the bank and the nonbank affiliates as part of a bank holding company complex sharply limited what assets the securities firm could pass through to the bank and on to the Fed’s discount window facility. 7  In the unwind, cash was transmitted back from securities firms to wholesale investors each morning, to hopefully be reinvested and returned back to the securities firms by the end of the day to finance their inventories of securities.
The scenarios bring together the financial and economic impacts of different temperature and climate policy pathways – a critical input for firms and policymakers to understand the future impact of the decisions they are making today. Scenario analysis makes questions like how resilient is this business, this financial system, or this set of policies, to each climate scenario possible to address. Accordingly, the Bank continues to be a strong advocate of the NGFS’ work and in 2019 announced our intention to assess the resilience of individual banks, insurers, and the wider UK financial system to different 1 2  See ‘Tackling climate for real: the role of central banks’ speech by Andrew Bailey, June 2021 NGFS climate scenarios 2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  climate scenarios through a Climate Biennial Exploratory Scenario exercise (CBES). I am pleased to say that exercise, which draws on the NGFS scenarios, will launch next week on 8 June. The CBES will involve the UK’s largest banks and insurers and explore three different climate scenarios, testing different combinations of physical and transition risks over a 30-year period. It is an important tool to size the financial exposures, to understand how different bank and insurance business models will be affected and how they might respond, and finally as a way of improving firms’ risk management practices through the process of carrying out the exercise.

One solution could be to create more flexible groupings within the Fund to discuss particular topics. For example, the Managing Director’s powers to initiate bilateral consultations about the policy choices of individual members could be expanded to cover multilateral issues discussed by the relevant group of members. If this does not prove practicable, other mechanisms will need to be found to introduce the requisite flexibility in how countries come together under the auspices of the Fund. The institution itself, though, also needs to change. The IMF has the great merit of being a universal institution. But it needs greater focus, independence and legitimacy. In terms of focus the members of the Fund, through the IMFC, could usefully restate the Fund’s mandate in terms of global economic and monetary stability. If it is to be able to meet its remit then surveillance should focus at least as much on balance sheets as on exchange rates. The mandate should make clear both what the IMF is responsible for and what it is not responsible for. But producing more focussed surveillance cannot be achieved in isolation from more fundamental reforms of the Fund. In terms of independence the responsibility for the delivery of a new mandate should be placed more firmly in the hands of the management of the IMF. At present, the Board involves itself in every aspect of the Fund’s activities.