samchain/econo-pairs-v1 huggingface dataset:
0206 0506 0806  0609  0409  0209  1208  1008  0808  0608  0408  0208  1207  5  Auto Lo an Inflation Report  5 0  1106 0207 0507 0807 1107 0208 0508 0808 1108 0209 0509 0809  Housing Other Consumer Corporate (rhs)  1.2  * Monthly interest rate on consumer loans, yearly interest rates on business loans. Source: CBRT. Source: ISE, CBRT. Against this background, referring to the partial improvements in labor and credit markets, I would like to remind you once more that the Monetary Policy Committee indicated after the October meeting that a slowdown in the pace of rate cuts would be considered at the next meeting depending on economic data and developments. However, it was also noted that lingering problems across the global economy were still a concern and that uncertainties regarding the strength of the recovery remain. Taking these factors into account, I should reiterate that it would be necessary for monetary policy to maintain an easing bias for a long period of time. 3. Inflation and monetary policy outlook  Distinguished Members of the Press and Esteemed Guests, After summarizing inflation and monetary policy developments in the third quarter of 2009, in this part of my speech, I would like to share with you the evaluation of the inflation outlook and monetary policy of the Central Bank of Turkey in the upcoming period. Firstly, I will briefly describe the economic framework underlying these forecasts.

16  BIS Review 143/2009  Figure 35: Inflation and Output Gap Forecasts* (Percent) Output Çık tı A çGap ığı  Forecast Tahm in A Range* ralığı*  End-year Inflation Targets  Uncertainty Band for 2009  2009 iç in B elirs iz lik A ralığı  Y ıl S onu E nflas y on Hedefleri  13 11  Control Horizon Kontrol Uf ku  9 7  Yüzde  5 3 1 -1 -3 -5 -7 -9 2  3 2009  4  1  2  3  2010  4  1  2 2011  3  4  1  2  3  2012  * Indicates a confidence interval of 70 percent  While better than expected outcomes in food prices necessitated a downward revision in food inflation for end-2009, this effect was offset for the medium term by the upward revision of the assumptions for global economic activity and oil prices, and therefore, there has not been a major change in our forecasts for 2010 and 2011. The revised forecasts indicate that the output gap will not close soon, supporting disinflation even when policy rates are kept at low levels for an extended period. It is worthy to note that the sharp fall in inflation in the first half of 2009 created significant base effects. This would, ceteris paribus, lead to volatility and some mild increases in annual inflation rates until mid2010 (Figure 35).
Chart 8: Proportion of part-time workers  Percentage of total employed 30 25 20 15 10 1985  1988  1991  1994  1997  2000  2003  Source: ONS and Bank calculations  BIS Review 16/2005  11  Chart 9: Real household disposable income growth and terms of trade  Percentage change on a year earlier 8.0  1990 = 100 112  Real household income growth  6.0 108  4.0 2.0  104  0.0 100  -2.0  Terms of trade  -4.0  96  -6.0 -8.0 1990  92 1992  1994  1996  1998  2000  2002  2004  Chart 10: Margins on personal loans to households  Per cent 10.0 8.0 6.0 4.0 2.0 0.0 1993  1995  1997  1999  2001  2003  Source: Bank calculat ions.

6  BIS Review 16/2005  Chart 1: Absolute changes in quarterly inflation  Percentage points 6.0  RPI  5.0  Consumption deflator  4.0 3.0 2.0 1.0 0.0  1960  1965  1970  1975  1980  1985  1990  1995  2000  S ource: Bank of England and O NS  Table 1: Average absolute changes in quarterly inflation and GDP growth  RPI 1960-1979  Consumption Deflator  1.10  0.76  1960-1972  0.83  0.57  1973-1979  1.58  1.11  1.19 0.79  0.59 0.34  1980-1992 1993-2004  GDP growth 1.45 1.18 1.93 0.69 0.34  Table 2: RPI inflation persistence  1947-1972 1972-1992 1992-2004  BIS Review 16/2005  0.56 0.91 -0.05  7  Chart 2: Bank of England repo rate and two-week forward curves  Per cent 6.5 6.0  Outturns  5.5  Nov 03 IR  5.0  Feb 05 IR  4.5 4.0 3.5 3.0  2000  2001  2002  2003  2004  2005  2006  Source: Bank of England  Chart 3: Earnings growth and unemployment  Average earnings in Q4 (percentage change on a year earlier) 30.0  1971 - 79  25.0  1980 - 89  1980  20.0  1990 - 99 1990  1971  15.0  2000 - 2004  10.0  2000  5.0 0.0  -6.0  -4.0  -2.0  0.0  2.0  4.0  6.0  LFS unemployment rate in Q1 (per cent of workforce)  8  BIS Review 16/2005  Diagram 1: Inflation process Labour costs Output prices  Demand pressures  Imports (directly consumed)  Other costs Distribution sector  CPI inflation  Chart 4: Inflation expectations  Per cent 8.0  6.0  Inde x-linke d gilts  4.0  2.0  Cons e nsus  0.0 1989  1992  1995  1998  2001  2004  Source: Consensus and Bank calculations.
Bank Negara Malaysia has therefore over the decades implemented initiatives to extend and improve the access of quality financial services to all segments of society. Advances in data collection and computation methodologies has been a crucial enabling factor in the progress made on financial inclusion not just in Malaysia, but also in many other countries. Unconventional information is now often used to assess a person’s credit worthiness when there is insufficient traditional information to build a credit score. This can range from electronic records of past utilities bill payments and even reputations on social media 3. This has led to vast improvements in access to credit for the previously excluded segment of population. Meanwhile, the compilation and analyses of detailed data on the financially underserved is a significant area that underpins international cooperative efforts to advance the global financial inclusion agenda. The Alliance for Financial Inclusion (AFI)  3  For example, Lenddo in the Philippines, Mexico and Colombia. BIS central bankers’ speeches  3  comprising of more than 90 member countries established the need for measurable national goals based on a set of quantifiable and time bound common indicators among its membership. These results serve as an objective basis for the AFI members to share experiences on the effectiveness of their policies. Statistical enhancements for a better tomorrow Great strides in the field of statistics have resulted in significant economic benefits. However, as the world further transforms, new challenges emerge and much more needs to be done going forward.

This has prompted greater international collaboration across the world to contribute towards a greater understanding of the implications of this trend. Underpinning this is also the high level of professionalism and integrity of statisticians at national and international agencies. It is in this recent two decades, that the global economic and financial environment has become more interconnected, more complex and more competitive. It has resulted in greater economic and financial integration and more intricate interconnectivities. At the same time, the world has also become more unstable and less predictable with frequent shocks and crises. This new and more challenging environment has significant implications for business and for public policy. Economic agents need to have an appreciation of the multi-faceted shifts in their environment in order to form the appropriate assessments and make informed decisions. For policy makers, it highlights the importance of having reliable, relevant and high-quality statistics to support and pave the way for sound policy decision making. For statisticians, the challenge is to continuously improve the statistical science towards facilitating the foundation to build a better future. My remarks today will be from the perspective of a central banker. Timely and high quality statistics is one of the important prerequisites for central banks to effectively achieve our goals of monetary and financial stability, and of fostering the development of a sound and progressive financial sector.
  To finalise, I will briefly refer to a line of work that the Financial Stability Board is coordinating to address the systemic risks associated with misconduct in financial institutions and markets. 2. The completion of Basel III  When the crisis started, the global banking system had built up several vulnerabilities:   Many banks were highly leveraged.   Capital proved to be insufficient and its quality was low.   There was an excessive exposure to liquidity risk.   The measurement of risk had major shortcomings.   And there was a lack of awareness of the dangers associated with systemic risk stemming from complex, opaque and highly interconnected global financial markets. Basel III is the regulatory response to address these vulnerabilities and, as such, it is one of the main elements of the global banking prudential reform. With Basel III the Basel Committee has:   Raised the level and quality of capital, especially core Equity Tier 1 capital.   Introduced additional requirements in order to reduce systemic risk, such as those imposed on systemically important banks, or the countercyclical capital buffers.   Introduced two new liquidity ratios to mitigate liquidity risk. BIS central bankers’ speeches  1    Introduced a new leverage ratio to limit leverage and reinforce risk-based requirements.   Developed a large-exposures framework to limit the maximum loss in case of counterparty’s failure.

  Last, but not least, the Basel Committee has improved the effectiveness of supervision by upgrading its Core Principles and by strengthening the supervision of systemically important banks. Many of these new rules are now in place and we can say that banks are more resilient now than in 2009. But different weaknesses persist. For this reason, the Basel Committee is undertaking a review of the capital framework that will be finalised by the end of 2016. In particular, the methodologies used to measure banks’ risks are being reviewed, both under the standardised approaches and under internal models. The standardised approaches are being revised to incorporate the lessons learned from the crisis so as to increase their risk sensitivity without, however, making them unduly complex. Regarding the internal models, they have been criticised because of their lack of comparability, the variability of the resulting risk-weighted assets, and their complexity and lack of transparency. These, let’s say, “faults” have undermined the credibility of capital ratios. Therefore, the Basel Committee is considering including several constraints on internal models in order to strike a better balance between simplicity, comparability and risk sensitivity. The other remaining major challenge is calibration. Basel III has changed the prudential setting quite significantly. The days when there was a single metric (the risk-weighted capital ratio) are over. We now have several prudential measures that will most probably be interacting in different ways.
The Committee has also published for consultation a proposal on the setting of further restrictions on the use of internal models to measure credit risk. These restrictions would consist in limiting modelling of the so-called “low-default portfolios” for which there is an insufficient history of default to be able to use advanced models. This would be the case, for example, of portfolios of banks, specialised lending or large corporations. In addition, in portfolios deemed suitable for modelling, minimum levels would be established for parameters (for example, probability of default and loss given default) so as to rule out abnormally low estimated values. Lastly, the Basel Committee has also published for consultation the possibility of setting a floor or minimum values for RWAs resulting from internal models. Not only the advisability of this is being discussed, but also, if approved, the design and calibration of these minimum values. Essentially, it would be a question of limiting to a certain percentage the maximum capital saving that institutions may obtain by modelling risk on their own account, rather than measuring it using the standardised approach. Conceptually, and provided it is correctly designed and calibrated, a floor of this kind can be a useful tool in the aim to reduce unwarranted and unwanted variation in RWAs: it would set for all institutions the same maximum level of saving obtainable using models, and it would help to ensure a minimum desired level of capital for a specific level of risk, and all without relinquishing risk sensitivity.

6  See Tucker (2010), Remarks at an FSB conference entitled “Financial Crisis and G20 Financial Regulatory Reform: An Overview”: “part of deferred compensation should be in the form of a debt contract, so that the managers and workers in large firms eventually become creditors of the firm and so they themselves have the same risks as other debt holders”. See also Liikanen (2012), “High-level Expert Group on reforming the structure of the EU banking sector”. 4  BIS central bankers’ speeches  Competition policy may matter too. Some countries – notably Australia and Canada – are sometimes characterised as shielding their main domestic commercial banks from competition, 7 in order to dilute the temptations of international wholesale banking. The UK should try, instead, to combine openness with stability. That requires a profitable banking sector: we should not forget that, as the Bank used to say, the first buffer against losses is profits. Other countries – perhaps most obviously the US – ban acquisitions of banks that would result in control of more than 10% of the country’s insured deposits. The approach there is to limit the accumulation of market power. Questions of industry structure, as well as firm structure, might be relevant to the UK. The operations making up Lloyds Banking Group and the Royal Bank of Scotland accounted for about 40% of the stock of lending to UK businesses in 2007. It was a disaster for domestic credit conditions when they failed.
The economic situation, inflation and the risk spectrum Our most recent Inflation Report contains a sketch of the Swedish economy that anticipates a relatively slow rate of growth for this year, but then a growth rate that is sustainable in the long term. GDP growth is assessed to be 1.7 per cent in 2003 and 2.4 per cent in 2004 and 2005. This means that the resource situation in the Swedish economy will not be strained over the coming years. Thus, economic activity is not expected to put any great pressure on prices and wages in future. Our picture of resource utilisation has been affected by the revisions Statistics Sweden made to the National Accounts recently, which indicate that productivity growth in the economy has been higher during the greater part of the 1990s than we had previously assumed. This means in turn that the economy’s long-term potential growth rate must have been slightly higher than we believed. Nevertheless, inflation rose tangibly during the spring and in February was 3.4 per cent according to the annual CPI rate. This is primarily due to higher electricity prices resulting from extremely low water levels in hydroelectric power station reservoirs and to higher oil prices. As I mentioned at the start, the energy price rise is expected to cause only temporary price rises and inflation is thus expected to fall back during the spring as electricity and oil prices decline.

As such, it is of utmost importance that we consider the principles of sound and prudent financial management in this undertaking. We cannot in good conscience, overburden and cause anyone to enter into financial difficulty in pursuit of owning a home. This fundamentally goes against the intention of owning a house. Therefore, based on the principles of fairness, justice and prudence, it is necessary for us to be absolutely clear on what ‘affordable’ means. This will influence both the diagnosis of the issue and the solutions to be implemented. We must be fair and just to the needs of the ordinary person. At its core, affordability is a function of two things; the income of the individual and the price of the house. A house is affordable if its price does not overburden the person’s finances and reflects its true value. It is crucial that the percentage of income spent to service the mortgage does not go beyond the person’s financial capacity, and that they are able to pay for other obligations on top of this commitment. To this end, at the individual level, we need to put emphasis on the value of financial literacy and financial education. For example, the Credit Counseling and Debt Management Agency recently launched the “Rumahku” portal to help potential borrowers in Malaysia to understand the financial commitments associated with owning a house. It also helps them to understand their capacity to meet these commitments.
It would have been tempting to take somewhat greater short-term risk with the exchange rate and direct monetary policy more toward domestic economic conditions and the inflation outlook, but the enormous damage that even a short-lived additional depreciation would have done to private sector balance sheets precluded such an approach. Under conventional circumstances, inflation-targeting monetary policy can be described, albeit in an oversimplified way, as entailing a policy interest rate that takes into account three factors: 1) the desired policy rate when inflation is at target and GDP is at potential; 2) the output gap; and 3) the deviation of inflation from target. In the case of Iceland, the exchange rate must be added to this list, and with a heavy weight. But the weight of the other items is not zero, and the importance of the exchange rate should diminish as the financial crisis relinquishes its grip and we reduce the weight of foreign debt in private sector balance sheets, thereby reducing the impact of the exchange rate on domestic liabilities. One of the Monetary Policy Committee’s many tasks at present is to assess how these various weights should evolve as circumstances change. Indicators presented at the most recent Monetary Policy Committee meeting suggest that foreign-denominated debt may weigh less heavily in corporate sector debt than was previously believed, and that it is currently diminishing in importance for both households and businesses. Before the banks collapsed, an average of 70% of corporate sector debt was denominated in foreign currency. But the distribution is quite skewed.

This led the main central banks to introduce various measures to provide liquidity to their banking systems at times of market malfunctioning. In addition, asset purchase and medium and long-term financing programmes were launched that avoided a systemic crisis which would have led to the failure of a large number of banks and, undoubtedly, to an enormous crisis in the real economy, as during the “Great Depression” in the 1930s. Even so, the severity of the recession led to a very sharp contraction in demand, and ultimately to inflation rates that were too low and incompatible with the mandate of the central banks of the main advanced economies. This situation forced them to reduce the interest rates determined by monetary authorities to historic lows. Some central banks, such as the ECB and those of Japan, Sweden, Denmark and Switzerland, reduced rates to negative levels. 5/7  In fact, one of the factors that has influenced the actions of central banks most in recent years has been the difficulty of reducing interest rates when they are already at very low levels. Interest rates that are too low may mean that there is no incentive for financial intermediation, since, for example, it is more profitable to store money in cash than to deposit it in the banking system. What should we do then when rates are very low and the economy still requires greater monetary stimulus? Central banks have made two main proposals in this respect.
After the transaction, the central bank has a building on the asset side of its balance sheet. But, at the same time, on the liability side, there is an equivalent amount representing the currency issue of the bank. Governments impose inflation tax on the society by borrowing from central banks. When such borrowings are effected, the government would give the central bank a government security such as a treasury bill. The central bank, in return, permits the government to take away an equivalent amount of currency and spend it to make payments. So, on the asset side of the bank’s balance sheet, it has a treasury bill. On the liability side, this asset is matched by a new liability called currency issued by the bank. But, to acquire that asset, the central bank has to spend only a fraction of the face value of the asset enabling it to make a huge profit out of the transaction. Central banks’ lending to governments become highly inflationary on another count. That happens when the commercial banks make use of this currency issued by the central banks as seed money to produce more bank money in the form of deposits. When governments spend the currency borrowed from central banks, such currency finally gets back to commercial banks as deposits of the public. Commercial banks, in turn, use such deposits to create more deposits and credit.

In contrast to earlier periods of sharply rising oil prices, the main reason behind the current rise in oil prices is a surge in demand and limited excess production capacity. Growth in oil demand has been particularly strong in regions where production is relatively energy-intensive, such as China and other non-OECD countries. China alone accounts for about 1/3 of global growth in oil demand this year. Moreover, there has been a marked reduction in excess production capacity in OPEC countries. Small production problems have therefore affected prices more than would otherwise have been the case. In the short term, oil prices constitute the greatest risk to the outlook for the global economy. High oil prices may contribute to a sharper-than-expected slowdown in global economic growth. This could in turn result in lower demand and lower commodity prices. High oil prices have mixed effects on the Norwegian economy. Lower demand abroad will have a negative impact on parts of the Norwegian economy. At the same time, domestic demand is normally stimulated by higher petroleum investment. The balance in the Norwegian foreign exchange market will not be affected to any appreciable extent. So far, the effects of high oil prices on developments in the real economy have been relatively limited. Credit developments in the past year have given ambiguous signals to our interest-rate setting. Growth in household debt is high. Enterprises have been reducing their debt for some time, but developments over the past months may suggest that this trend has been reversed.