samchain/econo-pairs-v1 huggingface dataset:
I want to look at one other aspect of the market over this quiet decade – distributional impact. Distributional effects are not a part of the Bank’s statutory primary objectives of price and financial stability. This is not because they do not matter. They certainly do, and access to housing is included in the Government’s economic policy, which the Bank has a secondary objective to support16. It is because these are issues primarily for elected authorities rather than technocratic ones, and there are more effective tools to address them. One cannot ignore that housing booms shift wealth towards existing and generally older homeowners and can therefore widen intergenerational inequity. The large increase in house prices in the decade leading up to the financial crisis came with a large expansion in mortgage debt. Much of the £ increase in household mortgage debt over that period represented borrowing by first time buyers and those moving up the housing ladder to finance an increase in housing wealth for those further up the ladder. Moreover, an increase in house prices often leads to higher rents which are predominantly paid as transfers from non-home owners to existing home owners, potentially even further restricting the ability of prospective first time buyers to put a foot on the housing ladder. As well as increasing intergenerational inequity, this shift in housing wealth also risks widening inequity within the younger generation going forwards as housing wealth is passed down within families17.

It is not clear how, were it to continue, the recent awakening of the UK housing market from its 10 years of snooze would affect aggregate indebtedness and the impact of the FPC’s measures. There are reasons to believe that a more active market, driven by a structural shift in housing preferences as a result of behavioural change and new working patterns could look very different, including in its distributional effects, to the periods of housing boom we have seen over the past 40 years. If, however, the self-reinforcing dynamics of past periods began to re-emerge – strong demand, fast growth of prices relative to incomes, easy credit conditions and high levels of transactions – the FPC’s measures would certainly begin to have a stronger impact in constraining the increase in aggregate mortgage indebtedness. But that, of course, is what they are intended to do. Thank you. 16  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  16
Mervyn King: Monetary policy developments Speech by Mr Mervyn King, Governor of the Bank of England, at the Great Hall, Winchester, 10 October 2006. *  *  *  My Lord-Lieutenant, Ladies and Gentlemen Thirty years ago, inflation reached 27% – the highest that any G-7 country has experienced in the past fifty years. A few months later, Southampton won the FA Cup for the first, and only, time. You will be pleased to know that I see no causal relationship. Later in 1976, Jim Callaghan, as Prime Minister, delivered a famous speech to the Labour Party Conference in which he said “We used to think that you could spend your way out of recession … I tell you in all candour that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step”. One of the economists who developed that insight – an American, Professor Edmund Phelps – was yesterday awarded the Nobel Prize. Low and stable inflation – 2.5% at present – is now the cornerstone of our economic policy. In that 1976 Cup Final every one of the players came from the British Isles. Today, it is hard to find British players among the top Premiership teams – globalisation is everywhere.

The Bank’s interest thus has a stimulating effect on the economy, and note that real interest rates at present are lower than they have been since the spring of 1996. It should  BIS Review 12/2003  1  also be borne in mind that changes in interest rates only affect demand and inflation with a considerable time lag, so that the full effect of interest rate cuts in recent months will not be felt for some time yet. ISK exchange rate No one doubts the importance of the ISK exchange rate for the Icelandic economy. The exchange rate has enormous impact on price levels and the performance of the export and competitive sectors. On the other hand, people must realise that the Central Bank has only limited long-term effect on the exchange rate. Many aspects of the economy affect the exchange rate. These include, for instance, foreign trade, foreign investments in Iceland and investment by Icelanders abroad, not to forget expectations of future economic developments. There is little doubt that expectations concerning power-intensive industry developments have influenced the exchange rate in recent months. Interest rates certainly affect the exchange rate, but experience both in Iceland and elsewhere shows that this effect eventually disappears, as long as monetary policy aims at maintaining long-term inflation comparable to that of the country’s trading partners. At the same time, intervention by central banks can have a temporary impact.
Interest rates have been on the increase recently in most parts of the world and capital is not as cheap as before, although it can still be procured at very low rates. Conditions in capital markets in general are therefore more likely to tighten in the coming years. Influential as economic developments on both sides of the Atlantic may be for the Icelandic economy, the way we handle our own affairs is still important. The crucial consideration is to achieve a rapid reduction in macroeconomic imbalances and restore stability. To do so, domestic demand must be reduced. Part of this process will occur automatically with the completion of ongoing investments in the aluminium and power sectors. Much has changed since the meeting a year ago, some things for the better, and others not. The current account deficit run up last year will not be forgotten for a long time – it even managed to trump the most pessimistic forecasts. Fortunately, clear signs of a gradual contraction are now visible, but this improvement is likely to be slower than we had previously expected, especially on account of foreign debt service. The Board of Governors of the Central Bank decided yesterday to leave the Bank’s policy rate unchanged at 14.25%, at the level where it has been since December. By contrast, the day before last year’s annual meeting, the Board of Governors raised the policy rate by 0.75 percentage points.

Firstly, due to the phenomenal rise in reserve holdings of central banks, in our region, and secondly, due to the intensive public scrutiny that reserve management has attracted as a result of the significant increase of foreign reserves in the national wealth of countries in our region. The drivers of this sharp rise in reserves are many. High commodity prices, increase of exports of natural resources, and increased remittances, have been among the main contributors to this situation. Consequently, many countries have been able to systematically accumulate large foreign exchange reserves over the past few years, and, in a way, reserve accumulation is now possible, not only for the wealthy industrialized countries, but for the so-called developing countries as well. 4. However, these reserve accumulation has not been without pain. In fact, developing countries, being those still requiring improvements in their domestic infrastructure and other systems, have found that the increasing of their foreign exchange reserves has resulted in a huge opportunity cost. This is particularly so because the funds collected in the form of foreign exchange have been generally applied to acquire low risk, low-return investments, mostly in fixed income securities in industrialized countries. This situation has indirectly led to such funds being used to fund the huge fiscal deficits of several Western countries, or the expansion plans of their large corporations, instead of being utilized for domestic infrastructure, which, on most occasions have been funded with high cost loans from those very same countries.
One example is the pharmaceuticals industry, where the development of new products would probably not be possible at the same rate if new medicines were not protected by patent laws. Incomplete competition is thus important for ensuring that product development takes place within research-intensive operations. There may even be special circumstances that make production most effective under limited competition. This applies in particular to various types of infrastructure, for instance the trunk network for electricity and water, which are what is known as natural monopolies, where it is more effective to society to only have one producer. These assertions are important to monetary policy. The Riksbank's target is expressed in terms of the rate of change in consumer prices, not in terms of maintaining a particular price level. It is important to distinguish between the effects on the price level and the change in the price level. If competition is incomplete and leads to a low level of cost consciousness or high profit margins, it may contribute to high price levels, but will not necessarily affect the rate of change in prices. It is conceivable that a country could have a high price level to start with, but a low expected inflation rate. An example of this is that several countries with high price levels, such as Sweden, Switzerland and Japan, have been among the countries with the lowest inflation rates in recent years.

As you know, a number of policy initiatives have been launched at the global level since the summer, for instance by Financial Stability Forum 5 or by the Porto informal ECOFIN 6 and it is still difficult to anticipate precisely the legal aspects which will be examined more particularly by the various international and European fora and bodies involved in this discussion. However, these initiatives provide an indication of possible legal considerations which might emerge, in particular in the European context. Legal certainty should go hand in hand with transparency. The focus on the transparency of complex financial instruments, of institutions and vehicles and on the appropriate disclosure of information on securitised debt and other structured financial products indicates that there is a need for regulatory and supervisory authorities to have a closer look on the legal frameworks applicable to securitisation transactions and market standards and how special purpose vehicles are currently regulated and supervised in the various EU Member States and at also at the international level. The report of the European Financial Markets Lawyers Group (EFMLG) of May 2007 on legal obstacles to cross-border securitisations in the EU 7 contains recommendations for further convergence of securitisation laws in the EU and invites the Commission to consider the adoption of a EU directive on specific legal aspects of securitisations which would enable Member States to adopt a certain number of principles common to all jurisdictions to ensure a high level of transparency, efficiency and legal certainty with regard to securitisation transactions.
•  The inflation forecast we publish today shows that UND1X inflation will be approximately in line with the target a couple of years from now. This assessment is based on, for instance, the assumption of firm growth in Sweden and abroad and gradual increases in the repo rate from its present low level. I will conclude my speech with a look back. The Riksbank has just completed its annual accounts for 2005 and it is therefore an appropriate time to discuss inflation developments over the past year, as is usual at the first hearing of the year. The most important conclusions are: •  Inflation was unexpectedly low in 2005. This was mainly due to various changes on the supply side of the economy holding down inflationary pressure more than we had expected. Essentially, these changes were high productivity growth and weak growth in import prices. •  These types of structural changes are difficult to capture at an early stage of the forecasting work. One indication of this is that in principle all forecasters overestimated inflation in 2005. The current assessment Before I discuss our assessment of the current economic situation, I would like to take up the issue of the link between our interest rate decisions and inflation. Why have we begun to conduct less expansionary monetary policy despite the fact that inflation is, and has been, low?

On the contrary, the economic upturn accelerated in 2004 and growth was even stronger than expected. Last year the economy also continued to grow at a good rate. To understand the low inflation it is necessary to find other explanations than weak demand in the economy. The reasons should mainly be sought in the positive changes on the supply side of the economy, which I have already mentioned, namely high productivity growth and low import prices. High productivity growth has held down cost pressures in the economy more than expected. Production has been able to increase without any particularly high increase in companies’ labour costs per unit produced (diagram 7). During 2003 and 2004 unit labour costs in the business sector actually fell. At the beginning of an economic upturn it is normal to have a period when production increases at a more rapid rate through companies using existing labour force more intensively rather than through new recruitment. However, even taking into account the business cycle, productivity growth has been high in recent years. 4  BIS Review 12/2006  This indicates that productivity growth has increased in a more lasting manner. The Riksbank has also gradually increased its forecast for the productivity growth trend in recent years. Despite this, productivity has continued to be higher than forecast up to 2005. One difficulty in the forecasting work is that productivity growth usually fluctuates considerably even taking into account changes in economic activity. For instance, productivity growth fell heavily in 2001.
Chart 1: UK employment rate Per cent 64 62 60 58 56 54 52 50 1971  1975  1979  1983  1987  1991  1995  1999  2003  2007  2011  2015  2019  Sources: ONS. Notes: 16+ employment rate. Chart 2: UK unemployment rate Per cent  14 12 10 8 6 4 2  1971  1975  1979  1983  1987  1991  1995  1999  2003  2007  2011  2015  0 2019  Sources: ONS. Notes: 16+ unemployment rate. 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  This jobs bonanza has had a broad geographic base. Since 2012, unemployment has fallen by at least 4 percentage points in all corners of the UK (Chart 3). Unemployment here in Scunthorpe has also fallen significantly from its peak of over 11% during the financial crisis but, at around 7 ½%, remains well above the national average. Chart 3: Fall in UK unemployment by region (latest vs. post-crisis peak) Region NI Scotland Wales SW SE London East W Mids E Mids Y&H NW NE 0  1  2  3  4  5  6  7  Percentage points Sources: ONS and Bank of England calculations. Notes: Data for NUTS1 regions. Changes between post-crisis peak and latest data in Labour Force Statistics. A high quantity of new jobs is no guarantee of quality. Yet recent job creation has also been encouraging on that front.

With due respect for all the forecasting difficulties at present, the Riksbank counts on demand in the industrialised countries turning upwards during the second half of next year. GDP growth in the OECD area is calculated to be 1 per cent this year, followed by 1,5 per cent in 2002. Under present circumstances the uncertainty around our main scenario is, of course, considerable. BIS Review 86/2001  3  We count on GDP growth in Sweden in the coming years being lower than we assumed earlier. The combined economic effect of interest rates and the exchange rate is therefor stimulatory. As the Committee is no doubt well aware, in the years ahead both increased transfers and tax cuts will also contribute to a rapid increase in household disposable income. Given a gradual recovery in the rest of the world, this appreciable overall stimulus from economic policy will lead to a gradual upturn in Sweden’s economy. GDP growth is expected to be 1.3 per cent this year, followed in 2002 and 2003 by rates of 2.2 and 2.8 per cent, respectively. The lower GDP growth — particularly this year — compared with our earlier assessment implies lower resource utilisation. At the same time, the recovery towards the end of the forecast period means that resource utilisation will then be rising again. Monetary policy is currently formulated on the basis of an assessment of inflation excluding transitory effects from indirect taxes, subsidies and house mortgage interest expenditure (UND1X).
For example, outstanding foreign exchange swaps have declined from a peak of $ billion last December to about $ billion currently, and outstanding commercial paper held by the CPFF has fallen from a peak of about $ billion last fall to around $ billion currently. Despite the recent dip in the size of the balance sheet, the size of the purchase programs underway makes it likely that balance-sheet growth will resume as assets acquired in conjunction with these programs overwhelm any further declines in the funds advanced via the shorter-term liquidity facilities. The size of the Federal Reserve’s balance sheet seems likely to grow to roughly $ trillion, somewhat above the peak reached last December. 1  However, it was anticipated that the attractiveness of the Fed’s facilities would decline as market conditions improved. In fact, it was a key element of the exit strategy that was deliberately built into the design of most of the facilities. BIS Review 94/2009  3  It is no coincidence that the growth of the Federal Reserve’s balance sheet since last fall has been accompanied by a sharp rise in the amount of excess reserves. When the Federal Reserve extends a loan or purchases a security, this automatically adds reserves to the banking system unless the Fed undertakes an offsetting reserve draining operation.

William C Dudley: The economic outlook and the Fed's balance sheet – the issue of "how" versus "when" Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Association for a Better New York Breakfast Meeting, New York, 29 July 2009. *  *  *  It is a pleasure to have the opportunity to speak here at the Association for a Better New York. This group has obviously been very successful. New York today is a far different and vastly superior place from what I found when I first arrived as a freshman at Columbia University in 1970. Today, I’d like to accomplish two tasks. First, I’ll comment briefly on the economy and the economic outlook – where we have been and where we may be going. I’m going to suggest that the balance of risks is still tilted toward weakness in growth and employment and not toward higher inflation. I will also argue that it is premature to talk about “when” we are going to exit from this period of unusual policy accommodation. Second, I will talk about the impact of the Federal Reserve’s lending facilities and purchase programs on the size of the Fed’s balance sheet. I’ll explain why an expanded balance sheet does not constrain our ability to exit from the current degree of policy accommodation. In other words, contrary to what is sometimes argued, it is not the case that our expanded balance sheet will inevitably prove inflationary.
Andrew G Haldane: The short long Speech by Mr Andrew Haldane, Executive Director, Financial Stability, and Mr Richard Davies, Economist, Financial Institutions Division, Bank of England, at the 29th Société Universitaire Européene de Recherches Financières Colloquium, Brussels, 11 May 2011. *  *  *  The views are not necessarily those of the Bank of England or the interim Financial Policy Committee. We are grateful to Nicola Anderson, Sarah Allen, Kath Begley, Antony Ford, Priya Kothari, David Miles, Mette Nielsen, Peter Richardson, Iain de Weymarn and Laura Wightman for comments and contributions. 1. Introduction  Is the world becoming short-sighted? As individuals, it sometimes feels that way. Information is streamed in ever greater volumes and at ever rising velocities. Timelines for decisionmaking appear to have been compressed. Pressures to deliver immediate results seem to have intensified. Tenure patterns for some of our most important life choices (marriage, jobs, money) are in secular decline.1 Some have called this the era of “quarterly capitalism”.2 These forces may be altering not just the way we act, but also the way we think. Neurologically, our brains are adapting to increasing volumes and velocities of information by shortening attention spans. Technological innovation, such as the world wide web, may have caused a permanent neurological rewiring, as did previous technological revolutions such as the printing press and typewriter.3 Like a transistor radio, our brains may be permanently retuning to a shorter wave-length. If these forces are real, they might be expected to be particularly important in capital markets.

Mario Draghi: Monetary policy and the economic recovery in the euro area Speech by Mr Mario Draghi, President of the European Central Bank, at The ECB and Its Watchers XVIII Conference, organised by the Center for Financial Studies and the Institute for Monetary and Financial Stability at Goethe University Frankfurt, Frankfurt am Main, 6 April 2017. * * * Over the course of the crisis, the making of monetary policy has become progressively more complex. We have operated in an environment where the limits of our traditional instruments have been tested, and where new instruments have had to be introduced. This has required adaptation, not just by those of us who decide on it, but also by the Watchers who observe it and attempt to anticipate it. Meetings such as this today have therefore taken on a special importance, since they represent an opportunity to communicate in both directions: for us to explain to you our assessment and our reaction function, and for you to provide your feedback. So in that spirit, I would like to make three points today. First, that our monetary policy is working and that it has been a key factor behind the resilience of the euro area economy over recent years. Second, that the recovery is progressing and may now be gaining momentum, though risks still remain tilted to the downside.