samchain/econo-pairs-v1 huggingface dataset:
However, cuts in the price of a certain product can have an impact on average consumer prices during a period of time, in the same way as when the developments in digital technology make some products cheaper. From this perspective, increased imports from China and other Iow-wage countries can have a directly dampening effect on inflation in the short and medium-terms. 14 There are probably reasons why the idea of lowering the inflation target has been put forward mainly in Sweden. Swedish inflation fell to low levels somewhat earlier than inflation in many other countries. Another important piece of the puzzle is that the low inflation is not considered to reflect a particularly poor development of the Swedish economy. It is therefore likely that one begins looking for other explanations for the low inflation. And if one then decides on the explanation that this is largely a matter of structural trends and that an inflation rate that is persistently below 2 per cent is compatible with a reasonable development of the real economy, it appears both possible and logical to lower the target. This is roughly the way I believe the reasoning works. ...but they do not determine inflation This method of reasoning may intuitively appear reasonable, but I think it disregards a couple of important circumstances. Both globalisation and digitisation are underlying structural trends that can have a dampening effect on inflation. But even if this effect may continue over a long time, it is essentially temporary.

This hump in inflation is largely due to the food and energy price pick-up that we have seen and that has become worse in recent months. However, at the moment, we have no reason to believe this would be more persistent. The growth situation maybe a little bit trickier to analyse. The events in Japan and the continuing events in the Middle East and North Africa could be interpreted as a downside risk on growth. At the same time, we see continued evidence of rather robust growth in some parts of the euro area, so I would not say that the overall growth outlook has shifted downwards despite the negative events I mentioned earlier. The risks may be to the downside, but my baseline scenario has not shifted. BIS central bankers’ speeches  1  Q. How would you describe the monetary policy stance. Is it appropriate now? When it comes to interest rates, I would say that monetary policy is accommodative. In my view, it is appropriately accommodative. It is appropriately accommodative in the sense that we still have some way to go towards repairing the damage that has been experienced as a result of the crisis we have been living through during the past three years. Q. Does that mean that you don’t see interest rates going up for, say, over the next three months? As you know, the Governing Council of the ECB never pre-commits on interest rate policy decisions.
As we might expect, there are large differences in both the channels and scale of impact across these three cohorts, though in each case the net effect is strongly positive. As a point of comparison, Figure 5 gives a scorecard for the relatively small set of households for whom the net effects have been negative – a retired household renting a property whose wealth is held mainly in deposits. In principle, this sort of personalised monetary policy scorecard could be drawn up at any level of disaggregation and for any monetary intervention, past or present. Clearly, the results and methodology underpinning any scorecard-type approach need to be treated with caution. For example, there are wide confidence intervals around the estimates presented here. 44  There are various ways to calculate the income-equivalence of the lower probability of unemployment, and these numbers would vary depending on the assumptions made. For simplicity, we exploit the results from our analysis, which show the effect on welfare from the lower probability of unemployment on the average household to be around six times larger than the welfare boost from higher labour income. This ratio is then applied to the boost to labour income experienced by different cohorts in Figures 1-5. 45 The cost of monetary policy, broadly defined, was £ in 2017, and there are around 27.2mn households in the UK. The cost of monetary policy includes the Bank’s monetary analysis area and the relevant share of other business areas’ (research, statistics, markets, banking, HR, technology etc.) expenses toward monetary policy.

The third candidate explanation is that central banks are the architects of the apparently low trend real rate by pushing up demand for long-dated risk free assets. This argument is, I think, largely mistaken for some of the reasons I alluded to earlier. QE will have affected the price and hence the yields on bonds. Indeed, that is part of the objective. Central banks make use of asset purchases when their preferred policy instruments run into their effective lower bounds. But QE will not have affected the natural rate. QE acts as a substitute for changes in Bank Rate, taking the effective or “shadow” policy rate – Bank Rate adjusted for the impact of QE – down below zero and towards the extraordinarily low natural rate. In other words, central banks are not causing low underlying interest rates, we are responding to them. Policy Implications  What are the policy implications in a world in which the natural rate remains around zero and all else equal will not rise back to close to pre-crisis levels even as headwinds abate? I think there are two main implications for central banks. First, and most obviously, if the natural rate is going to be lower on average then the same will be true of the policy rate.
It limited the extension of bank credit in Singapore dollars to non-residents except for economic activity, and buttressed this with some restrictions on interbank Singapore dollar derivatives, such as currency and interest rate swaps and options, which might have helped financial players to leverage or hedge their positions. This policy made it harder for would be speculators to short the Singapore dollar, and signalled unambiguously our disapproval of such speculation. This framework served us well. That we encountered very few speculative attacks in practice perhaps showed that the policy was effective. The strength and stability of the Singapore dollar instilled confidence and kept inflation low. Price stability provided the foundation for sustained economic growth, which in turn provided the basis for continued strengthening of the Singapore dollar. We benefited immensely from this virtuous cycle. Over the past two decades since 1981, the Singapore dollar has risen steadily by more than 70%, on a trade-weighted basis. Domestic inflation has been among the lowest in the world, averaging 2.0% per annum compared to 6.5% for the OECD countries. In real terms, GDP growth averaged 7.6% a year, while GDP per capita in 2000 was two and a half times the level in 1981. Financial supervision MAS’ second responsibility is oversight of the financial sector. MAS was an integrated supervisor long before this became internationally fashionable. When it was formed in 1971, MAS was responsible for both monetary policy and the supervision of banks.

Conceivably, too, such a failure could have such serious consequences for the liquidity of - or price level in some particular sector of the financial markets, that concerns would arise for the liquidity, or solvency, of other bank or non-bank institutions that were known, or believed, to be heavily exposed to that market. In this sense size does matter - and, whether or not one chooses to describe the risk of this happening as systemic, there is no doubt that a sufficiently large disturbance originating in the non-banking activity of one financial institution could put others in difficulty. This possibility must be of concern to financial regulators, including central banks, concerned with the stability of the financial system as a whole. It certainly in my view provides macro-prudential justification for regulatory oversight of the activity of (large) non-bank financial institutions, and of the non-banking activities of banks - quite apart from micro-prudential regulation in the interests of consumer protection. It provides justification, too, for some form of consolidated prudential oversight of multifunctional financial groups and for monitoring large exposures, both intra-group and to outside counterparties. Where a problem of this sort does arise, it may well justify technical central bank intervention to help contain it - for example by facilitating payments and settlements to minimise market disturbance.
More stable inflation expectations shift the Taylor curve in Figure 3 closer to origin and make the balance between the stability of inflation and the stability of the real economy more favourable. As the central bank's inflation forecasts in the short and medium terms may deliberately deviate from the target, it is also interesting to compare inflation expectations with the central bank's inflation forecasts. If the economic agents share the central bank’s view of how inflation will approach the target, inflation expectations at different time horizons should be close to the central bank’s forecasts. The degree of correspondence between inflation expectations and the central bank's inflation forecasts then becomes a measure of how credible the central bank's inflation forecasts and analyses are. Such a correspondence between expectations and forecasts is of course also desirable for forecasts for the real economy and, not least, for forecasts for the policy rate, which I will now discuss. Was the implementation of monetary policy effective? I have spoken earlier about what characterises efficient monetary policy decisions. This was in relation to the balance between stabilising inflation and stabilising the real economy given the information available at the time of the decision. Another important aspect is to investigate how effective the implementation of monetary policy has been, in the sense of affecting the economy in the desired direction and to the right amount.

These include the summer school, which brings in leading academics to teach courses in relevant areas to participants, a large number of whom are central bankers. It also organises a highly-demanded summer internship programme for top undergraduate students. And it collaborates with the Banco de España in the training of bank supervisors, and in the organisation of research workshops and conferences. In terms of broader service to Spanish society, three faculty members participate in the Council on Economic Advisors that advises the Spanish Ministry of Economic Affairs; one is a member of the Multidisciplinary Group that advises the Ministry of Science and Innovation; another is a member of the Advisory Board of the Spanish Independent Agency for Fiscal Responsibility, and another is chair of the Scientific Committee of the Spanish State Research Agency. All in all, and from the perspective of the Banco de España, CEMFI is indeed very good value for money. Finally, I would like to take this opportunity to congratulate Mónica Martínez-Bravo for the recent award of the Banco Sabadell Prize for Economic Research, given to a Spanish researcher under the age of 40 for outstanding contributions to economics and social sciences. Congratulations, Mónica! To conclude, let me address the students of the class of 2021. You are now entering a very exciting period of your lives.
However, formulating the right policy responses to monetary policy spillovers requires a better understanding of various spillover channels as well as mitigating factors that help reduce the sensitivity of EMEs to global monetary policy shocks. I would therefore like to thank you all for taking the time to join our Workshop today, which brings together seasoned researchers and policymakers dedicated to understanding these vital issues. I look forward to their insights and I hope you enjoy the Workshop. Thank you. Last revision date : 25 August 2022

This is less true for emerging markets, including Brazil, where central banks tended to keep a strong focus on financial stability even before the global financial crisis. In part, this reflects the fact that financial crises were relatively more common in emerging markets in the late 20th century. There was also an old and important academic and monetary policy debate in the decade leading up to the crisis on whether we should lean against a financial bubble or clean up after it has burst. However, the lack of consensus on this issue resulted, in practice, in a mostly laissez-faire policy stance. BIS central bankers’ speeches  1  Today, I think it is safe to say that there is general agreement that proactively maintaining financial stability, by taking appropriate action against the buildup of vulnerabilities, is a proper goal for central banks. The high cost of “cleaning up” after the global financial crisis will serve as a reminder against excessive complacency for some time to come. The current debate is about the policy tools for the goal of maintaining financial stability. Macroprudential policy is widely seen as the first line of defense against systemic risk, but there is still uncertainty about its effectiveness. There is also disagreement on whether monetary policy should take financial stability considerations into account at all. On this latter issue – the use of monetary policy to deflate potential financial bubbles – there are two views.
Under this process, the system of burden-sharing among the national and mutualised funds will be gradually adjusted until the national compartments disappear completely around January 2025. The complex agreement reached has yet to be accepted by the European Parliament, so there is still uncertainty as to the final design of the mechanism. Moreover, the capabilities of the mechanism will foreseeably be limited at first, since the single resolution fund is constrained by its modest size and reduced mutualisation. Furthermore, for the time being, the agreement does not include common public mechanisms for the resolution of vulnerable banks after the available private funds have all been used up. 4  BIS central bankers’ speeches  In this respect, although the new resolution rules reduce the foreseeable scope of the required external funds, provision should be made for public financial support at EU level to ensure the orderly resolution of systemic banks if necessary. For example, following the example of the US, we could consider an arrangement in which the European Stability Mechanism could provide the resources needed to the common resolution fund with a charge to future contributions from the industry. Otherwise, the single resolution mechanism would, at least in the short-to-medium term, foreseeably be insufficient to prevent banking crises from continuing to be resolved with a charge to national funds, whether public or private. That said, the agreement reached should by no means be underrated.

Peter Pang: Diverging monetary policies, global capital flows and financial stability Opening remarks by Mr Peter Pang, Deputy Chief Executive of the Hong Kong Monetary Authority, at the conference on “Diverging Monetary Policies, Global Capital Flows and Financial Stability”, jointly organised by the Federal Reserve Bank of New York/European Central Bank/Federal Reserve Bank of Dallas/Hong Kong Monetary Authority, hosted by the Hong Kong Monetary Authority, Hong Kong, 15 October 2015. *  *  *  1. It is my great pleasure to welcome all of you to this Conference jointly organised by the Board of Governors of the Federal Reserve System, the European Central Bank (ECB), the Federal Reserve Bank of Dallas and the Hong Kong Institute for Monetary Research. 2. Today’s Conference is very timely. With the US Fed contemplating an imminent liftoff in policy rates, while the ECB and the Bank of Japan (BoJ) are still preoccupied with quantitative easing (QE), central banks around the world are carefully weighing the potential impact of the expected divergence in monetary policies on global capital flows and financial stability. Financial markets often move ahead of the real economy. We have seen global financial markets tumbled and emerging market economies (EMEs) experienced quite intense capital outflow pressures during this summer. Many would be interested to know whether such gyrations of capital flows and asset prices have already captured a good part of the adjustment process or are just a curtain raiser for even stronger threats to financial stability of the EMEs. 3.
Raising the key policy rate in Norway too rapidly in the period ahead could act as a brake on the upturn in such a way that unemployment rises and inflation becomes too low. Uncertainty about the effects of higher interest rates also suggests a cautious approach to interest rate setting. We have experienced a long period of low interest rates and rising household debt ratios. The effect of higher interest rates will therefore likely be more pronounced than the effect of earlier rate increases. I will return to this later. The risk outlook also reflects growing global protectionism and turbulence in some emerging economies. Lower-than-expected global growth will have spillover effects on the Norwegian economy. 1/7  BIS central bankers' speeches  The interest rate level the Bank envisages for the years ahead is modest compared with historical interest rate levels. In the Bank’s assessment, the level of the so-called neutral interest rate has fallen over time (see Brubakk et al (2018) and Norges Bank (2018)). The key policy rate is therefore not expected to be as high as in earlier upturns. The objective of monetary policy is to maintain low and stable inflation and contribute to high and stable output and employment over time. As monetary policy is to be flexible and forward-looking, the key policy rate is lowered when the economy is entering a downturn. Similarly, the key policy rate should be raised before the economy overheats. Monetary policy affects inflation, output and employment through several channels.

The fall in oil prices in 2014 led to a further reduction in the key policy rate in Norway. Chart: Gradual normalisation of monetary policy Last week, Norges Bank raised the key policy rate for the first time in seven years. If the economy evolves as currently envisaged, last week’s decision will be the beginning of a gradual normalisation of the interest rate level. This is good news. It means that the Norwegian economy is performing well. The effects of the fall in oil prices in 2014 have unwound. The economy has shown solid growth in recent years and the labour market has been improving. The upturn in trading partners’ economies, higher oil prices and low interest rates have lifted growth in Norway. The outlook for the Norwegian economy implies that the key policy rate will be raised in the years ahead. Capacity utilisation is close to a normal level. Underlying inflation is close to the 2% inflation target. The key policy rate is being raised to prevent pressures in the economy from intensifying and triggering a surge in prices and wages. Raising the rate also reduces the risk of a renewed rapid rise in property prices and debt. High price and wage inflation and a further buildup of financial imbalances would increase the risk of a sharp economic downturn further out. There are a number of factors to suggest that the key policy rate should be raised at a gradual and cautious pace. An environment of low global interest rates limits the room for manoeuvre.
Share of global exports Per cent 16  16 US  12  12 Germany  8  8 Japan  4  4  China  0  0 1983  1987  1991  1995  1999  2003  Sources: IMF, EcoWin and Norges Bank  In recent years, China has become an important player in international trade, and the country is now the world’s fourth largest trade nation. The Asian economies and the rest of the world have become more integrated. Technological advances and a sharp fall in prices in the IT and telecommunications sectors have exposed a number of services that were previously sheltered to competition from low-cost countries. Indian companies service three million customer telephones for companies in the US and the UK daily. European airlines are transferring ticket settlement to India. US companies are outsourcing accounting services to India. Analytical activity in investment banks and development divisions in ITC companies are also being moved to India. Norwegian engineering companies are buying cheap engineering services in India and China. EU enlargement this spring, with ten new members, is also influencing the division of labour in Europe. BIS Review 11/2004  3  Chart 4.

The ACPR’s pilot exercise and CCFD’s report Despite the Covid-19 crisis, the pilot exercise on stress tests which I announced here one year ago was launched in July and its results will be published next April. Top French institutions (both banks and insurers) are currently running it. This exercise is the first of its kind worldwide. Its goals are twofold: 1/ better assess the exposure of banks and insurers to climate risks (both physical and transition risks) in a forward-looking/dynamic manner. 2/ Assist the industry to better factor in climate change risks, improve models and assessment methodologies, and identify data gaps. Beyond that, we hope we are designing a methodology for climate stress tests that can be fine tuned over time and which other central banks and supervisors will be able to follow. The Authority also published a guide last May referencing the best practises regarding the governance of climate change risks for banks. On another note, the ACPR’s CCFD (our new Commission Consultative Climat et Finance Durable [Climate and Sustainable Finance Committee]) has been monitoring the public commitments of financial institutions to exit carbon-intensive industries. The ACPR-AMF preliminary joint report published this morning stresses the progress made by the French financial sector, but also the need for harmonisation. 1.2.