samchain/econo-pairs-v1 huggingface dataset:
Unit Real Wage Index in Manufacturing Industry (1997=100)  125 115 105 95 85 75 65  05-III  05-I  04-III  04-I  03-III  03-I  02-III  02-I  01-III  01-I  00-III  00-I  99-III  99-I  98-III  98-I  55  Source: SPO, TURKSTAT and CBRT. In 2006, in the event investments and employment in the manufacturing industry follow the same course as the previous period, the continuance of productivity increases may be expected. Meanwhile, the salaries of civil servants and minimum wage increases point to a rise in wages above inflation. The unfavorable course in raw material prices, another significant component of costs, still persists. Crude oil prices exceeded their historical peak figure experienced during Hurricane Katrina by the 25th of April and reached USD 73.3 per barrel. OPEC’s decision to leave its quota unchanged at its meeting of the 8th of March, the low level of unused capacity in the sector and uncertainties about leading oil producing countries such as Nigeria and Iran led to an increase in oil prices. Despite new production capacities are expected to be introduced, the International Energy Agency’s (IEA) expectations for the growth trend in crude oil demand, which are above those of 2005, strengthen the probability that oil prices will remain high throughout 2006.

Accordingly, the goods group inflation should be realized at about 3 percent in order to achieve the 2006 target. However, the acceleration in price increases in the items that is not under the control of the monetary policy, such as fresh fruits and vegetables, oil, basic metal and gold, reduces this possibility. At this point, it is meticulously emphasized that price increases in the said items are to a large extent temporary and that monetary policy will not react strongly as far as the secondary effects remain limited. Another basic risk relating to the upcoming period is the difficulty in foreseeing the global risk appetite and the course of international liquidity conditions. The improvement in the quality of current account financing and favorable developments in public finance in the recent period are considered to increase the endurance of the economy against likely shocks. However, it is a fact that any shock that may come from the said direction in the current situation carries with it the potential to affect our economy unfavorably. In case of such an event, our aim will be to ensure the consistency of inflation with the medium-term targets. In this context, by diffusing the policy reaction over time, the impact of exogenous shocks will be eased without any harm to price stability. Distinguished Guests, Price stability is a sine qua non precondition with respect to macroeconomic stability and sustainable growth. Significant steps have been taken in this direction. The CBRT will continue to fulfill its tasks in carrying these achievements forward.
Persistent below-target inflation is very costly, especially when it is accompanied by debt overhang, substantial resource slack, and weak growth. In the United States, the challenge of below-target inflation continues to be underappreciated in public commentary. Mistakenly, many greatly exaggerate the risks of overly high inflation. Before turning to inflation risks, let me mention one reason for some confusion. That is, some commentaries minimize the current below-target inflation experience by citing the slightly higher increases of the Consumer Price Index, or CPI. The CPI is the best-known single measure of inflation, and its underlying trend currently is running at a bit above 1–1/2 percent. Many commentators compare the CPI against our 2 percent inflation objective. Unfortunately, this is an apples and oranges comparison: The CPI tends to run about a quarter to a half of a percentage point higher on average than the PCE index because of its different market-basket composition and statistical construction. Accordingly, it is much more accurate to describe the Fed’s inflation objective in terms of the CPI to be roughly 2–1/2 percent. So, against this 2–1/2 percent benchmark, CPI inflation also is quite low relative to target. In any event, the PCE price index is the preferred inflation measure on a number of theoretical grounds and the one chosen by the FOMC as its policy target; therefore, we should judge the Committee’s ultimate inflation performance using that index relative to its 2 percent goal. So, what is the inflation outlook in the current environment?

The 1930s’ deflation and the 1970s’ double-digit inflation clearly indicate that the nation is well-served by the Fed having a long-run inflation objective and making sure it achieves that objective within a reasonable period of time. The employment mandate is more nuanced. Because maximum employment is determined by nonmonetary factors that affect the structure of the labor market, we can’t have a simple, time-invariant goal. We do, however, project where we think the longer-run normal, or “natural rate,” of unemployment is currently. Today, our estimates for this rate generally range between 5.2 percent and 5.6 percent. Such assessments can vary over time. However, the most important determinants of the natural rate change only slowly, so today’s assessment is an important input into policy. Being explicit about it contributes greatly to our accountability. Accountability is key. Much as corporations require corporate scorecards and earnings calls to explain quarterly performance, the Fed needs to regularly communicate its policy strategy and evaluate how it’s doing. And, when we are missing our policy goals, the public needs to know what we are doing about it. We need to decide on the appropriate actions to achieve our objectives and communicate them to the public. To that end, in our longer-run strategy statement we’ve said that when the economy deviates from price stability or maximum  2  2  Federal Open Market Committee (2014c). BIS central bankers’ speeches  employment, we’ll take a balanced policy approach that achieves both goals within a reasonable period of time.
The takaful sector needs to develop strategic and high-performing leaders who will be able  BIS Review 13/2006  3  to lead the way and are committed towards building a stronger organization that is able to contribute towards the tremendous growth potential for takaful. 16. In the area of technical expertise, the takaful sector has to intensify its efforts in the training and development of expertise in such areas as actuarial, underwriting, specialist claims and product development capabilities. In the actuarial area, for example, an issue that needs to be addressed is the scarcity of qualified actuaries to serve the takaful sector. The expertise of actuaries is needed to quantify the appropriate contribution rate to be charged to the pool of takaful participants. Additionally, the proper pricing of the contribution rate will ensure the ability of the takaful fund to fulfill the requisite obligation to participants. The actuarial methodology is also required to ensure prudent distribution of surplus to participants. The increasing roles of the actuary in the family as well as general takaful underscore the importance of developing takaful actuaries who have the understanding of the takaful business and the unique characteristic of the takaful operation. 17. Perhaps it is timely for me to share initiatives taken by Malaysia in talent development at all levels in Islamic finance.

The increase in the number of banks, branches and their agencies, as well as the growing number of bank employees have caused the coverage of the population to improve significantly. Thus, the number of inhabitants per bank, banking unit and per bank employee has decreased considerably. 2  BIS Review 101/2006  Table 2: Coverage with banking services 2003  2004  2005  2,236  2,816  3,479  161  188  250  149  176  217  13.9  15  13.9  bank  206,851  194,971  184,410  banking unit  20,815  16,593  12,539  bank employee  1,388  1,108  901  Number of employees Number of branches, agencies Number of employees per: bank banking unit 1  Number of inhabitants per :  Table 3: The expansion of the banks’ network by the end of the 9-month period of 2006Banks Nof No. Banks No. of Branches No.
On the external side, euro area exports should continue to benefit from positive global demand conditions in 2005. I admit, we have seen some moderation in global growth rates following a period in which the world economy has experienced its strongest dynamism in many years. We view this moderation, however, as an orderly return to sustainable, and still robust, rates of growth. On the domestic side, investment has thus far been subdued, partly due to weak construction investment. Looking ahead, investment should be supported by the global environment and the continuing very favourable financing conditions in the euro area. In addition, improved earnings and greater corporate efficiency gained through business restructuring should support investment. As regards consumption, we see scope for it to strengthen further, particularly once employment prospects have improved more visibly. As with any assessment of the future, this outlook is surrounded by some uncertainty. In particular, there are risks to growth prospects stemming from unfavourable developments in oil markets. In this respect, let me emphasise a number of characteristics of the recent rise in oil prices. First, it is evident  BIS Review 66/2004  1  that recent oil price developments differ somewhat from previous oil price shocks, as they have been partly driven by buoyant global demand, and not only by constraints on the supply side. Second, oil prices, in real terms, have remained at a much lower level than in previous episodes. Third, the oil-intensity of production is lower in the euro area than it was in the past.

Over recent years, central banks and economic research have paid increasing attention to these issues. Indeed, the experience in Japan over the past two decades underscores how harmful bursts in asset price bubbles can be for macroeconomic stability, and how difficult it is for policy-makers to mitigate these costs. Indeed, there are quite a number of historical episodes when a collapse in asset prices triggered sustained deflationary trends and problems of financial instability. When discussing asset prices and monetary policy, four questions come to mind: •  First, is it possible to identify the emergence of an asset price bubble in the markets? And if so, how? •  Second, assuming that a bubble has been identified, what can policy-makers do about it? What are their choices and dilemmas? •  Third, what is the concrete situation in equity and housing markets in the euro area at present? •  Finally, what role do asset prices play in the ECB’s monetary policy and what challenges could they pose? How to identify a bubble? Answering the first question is both easy and tricky at the same time: I think, we can all agree that it is very difficult to identify bubbles, not least since we need to distinguish asset price changes that are justified by changes in fundamentals, such as technological advances or changes in risk preferences, from those that are due to misalignments or “irrational exuberance” - to quote a prominent central bank colleague.
Timothy Geithner: US and the global economy Remarks by Mr Timothy Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Asia Society’s CEO Forum, New York, 19 October 2005. *  *  *  I want to focus my remarks today on the imbalances in the world economy and their implications for the United States and Asia. These imbalances, which are most visible in the U.S. current account deficit, present challenges—and risks—for the world economy. How we manage these challenges will have significant implications for our economic future and for the rest of the world. The sources of these imbalances are varied and complex. They are the result of fundamental changes in the world economy, changes not anticipated and not fully understood. They involve economic forces across the global economy, some transitory and some probably more enduring. The imbalances took a long time to build up and they will probably take a long time to unwind. The magnitude and persistence of these imbalances seems to be the result of the interaction of two forces. The first involves a decline in U.S. savings relative to domestic investment, matched by an increase in savings relative to investment in parts of the rest of the world, principally in emerging Asia and the major oil exporters. In the United States, public savings and household savings fell, while investment spending stayed reasonably strong and housing investment very strong, even during the latest recession.

In parallel, the weak aggregate demand does not allow for the increase in businesses profit margins. In the medium term, the expected improvement in economic growth will bring the economy back to equilibrium and will increase demand-side inflationary pressures. From the supply side, the decline in food and commodity prices in global markets and the increase of domestic agricultural production are expected to exercise downward pressures on inflation during 2015. However, their negative impact on inflation is expected to phase out in the coming years. BIS central bankers’ speeches  1  Inflation expectations will have a similar direction of their impact. In the short term, economic agents expect low inflation rates. This projection does not encourage the growth of consumption and of investments. Moreover, it tends to be factorised in low prices in future contracts between economic agents. Inflation expectations will shift upward, as inflation rises. Considering the above arguments, the Bank of Albania estimates that – with a high probability of occurrence – inflation will range 1.8–4.4% four quarters ahead. The balance of risks to the inflation projections remains on the down side. Downward risk factors to the inflation projections are slower economic growth, stronger decline of global prices and materialisation of second-round effects from lower oil prices at home. On the other hand, a factor that may contribute to a faster increase in inflation in the future is the increase in prices of agricultural products as a result of damages to agricultural land from recent floods.
Imports will remain notably buoyant, in line with the strength of final demand. This dynamic activity will provide for continuity in employment creation, to which the moderation in labour costs will prove conducive, and, as I stated earlier, it will allow the unemployment rate to continue falling. Factors of risk The main risks for the Spanish economy from the external environment are associated with the possibility of a sharper-than-expected decline in the emerging economies. Within the Monetary Union, headway in institutional architecture and the agreements reached with Greece have lessened financial tensions in the area. On the domestic front, the main risk is the possible influence of the uncertainty surrounding medium-term economic policy developments on agents’ spending decisions. In particular, these risks are associated with the possibility of a loss of confidence due to the exhaustion of or slippage in the reform process, or to the non-fulfilment of fiscal consolidation commitments, given that these have been the pillars upholding the adjustment of the Spanish economy, the pick-up in competitiveness vis-à-vis the euro area members as a whole and, in short, our economic recovery. The challenges to and strengths of the banking system Turning to the situation of our banking system, I would firstly like to highlight the efforts Spanish banks have made to improve their solvency. These have taken the form not only of enhanced capital ratios, regardless of the solvency ratio used, but also of an increase in the absolute volume of own funds.

I expect that our new Chair, Janet Yellen, will play a significant role here as she uses her press conferences to explain what simply cannot be communicated with a series of dots or within the statement we release after each meeting. Alas, there is Congress Now mind you, your monetary authority – your Federal Reserve – does not hold every card to your future in its hand. No matter how clearly we communicate, no matter how expertly we tailor our supervision of your banks, no matter how we conduct monetary policy, our work is necessary but not sufficient to the success of the Louisiana, Texas and U.S. economies. The fiscal authorities – Congress and the executive branch – must do their job to provide the proper tax, spending and regulatory incentives for businesses to take advantage of the cheap and abundant money the Fed has made possible and put it to work to grow, expand their payrolls and let America truly prosper. I will spare you my thoughts on Congress (it is not very central banker-like to resort to profanity). All I will say is that you and your neighbors and friends and customers are the ones who elect people to office and whether you are a “D” or an “R,” you need only look at yourself in the mirror to see who is in charge of placing the right people in office to get the job done of putting the American economy back on track. I’d say you have some serious work to do here.
Regarding the economic consequences of the reforms, it is important first to remember the cost of the financial crisis: according to IMF data, the total loss of global output from 2007 to 2014 amounts to 25%. Compared to this considerable loss, the potential cost of financial regulation is very small. And above all, no one can seriously claim that in France or more generally in the majority of advanced economies the supply of credit has been excessively constrained by banking regulations. On the contrary, lending to the economy remains robust, with housing loans in France up 5.6% year-on-year in April 2017 and loans to non-financial corporations up 5.4%. In the coming months, this strong overall growth may actually warrant general vigilance and closer scrutiny by the High Council for Financial Stability, in which I participate. 1/3  BIS central bankers' speeches  * * *  II. Nevertheless, we are still faced with a challenge for the future, which brings me to my second point: even if the achievement is now on solid foundations, there is clearly no room today for complacency or respite. Although the risks of a future crisis have diminished, no one should believe that they have disappeared entirely. So what measures are required? For banks, the priority is to stabilise the regulatory framework and therefore we must finalise Basel III. Here, it is useful to remember that, essentially – let’s say approximately 80% – Basel III was already completed in 2011.

This is thanks to unprecedented international cooperation on financial reforms under the aegis of the Financial Stability Board and the coordination of the Basel Committee in the banking sector, and thanks to the remarkable efforts made by the banking industry. Thankfully, the world of finance in 2017 is not what it was in 2007. That is particularly true for banks in Europe and in France. It is important to stress this achievement, as the European banking sector is often criticised, particularly from the other side of the Atlantic, solely in the light of its difficult cases or institutions that are trailing at the rear, whereas on the whole, it is clearly far more robust than before the crisis. Banks in France for example, have doubled their levels of capital since the crisis and generate a return on equity (RoE) of 7%, and even up to 9% or 10% when adjusted for one-off items. As regards this return, it is clearly lower than the pre-crisis levels, but in certain respects, this can be expected and is reasonable. We cannot ask banks to generate a double-digit return on equity when interest rates and the risk-free rate are so low and banks are indeed more resilient than they were. Moreover, this improvement does not only concern the banks: it can also be seen in the non-banking sector and the financial markets, with particular progress made with regard to over-the-counter derivatives and the shadow banking system.
Other factors that have temporarily held down inflation, such as the earlier krona appreciation, the rapidly-intensifying competition in the food retail sector and price pressure on clothing resulting from the EU abolishing textile quotas, are effects that are likely to decrease over time. The fundamental factors are all in place; expansionary monetary and fiscal policy, strong growth in real wages, good underlying productivity growth and stable export demand, particularly from the United States and rapidly-growing emerging markets such as China and the countries in central and eastern Europe. Therefore, we should not become exclusively preoccupied by the current inflation rate. Instead we should keep the right perspective. When developments gradually approach the usual recovery pattern, the indications are that resource utilisation will increase and inflation will approach the target level. There has been concern that an interest rate cut would have a slight effect on consumption and investment, as interest rates are already low and lending is growing rapidly in a situation where housing loans can be obtained at just over 2.5 per cent interest. Companies also have good profits and ample liquidity. Meanwhile there is believed to be a risk that even lower interest rates would further push up house prices through cheaper housing loans. An interest rate cut could thus have a misdirected effect with the risk of future setbacks; little or no effect on achieving the inflation target but a strong impact on the demand for assets such as houses.

I intend to briefly discuss both perspectives in turn and first explain why we made the decisions we made one to two years ago and how they have affected economic developments today – and then I will discuss how we use the monetary policy we conduct now to try to achieve the inflation target over the coming years. Reasons for the current low inflation rate The reasons why we misjudged inflation trends earlier are fairly easy to pinpoint now. Although some forecasters were more successful than others in their assessments, almost all made the same two mistakes; we underestimated productivity growth (and thereby overestimated resource utilisation in the economy) and we overestimated import prices. We, like many other analysts, assumed that the rate of productivity growth had increased in a number of sectors, partly due to IT investments combined with restructuring. Similarly, we knew that globalisation was pushing down import prices for many products. What we and many others misjudged was the magnitude of the changes. Productivity growth was even stronger than we had anticipated, with strong growth in the service sector, for instance, where IT use has increased. Import prices were slightly lower than we had expected, partly due to an unexpectedly high increase in the percentage of total imports from low-wage countries such as China and Poland. Consumer prices of imported goods have fallen since mid-2003. It is perhaps all too common that forecasters are reluctant to stick their necks out with regard to large underlying changes.