samchain/econo-pairs-v1 huggingface dataset:
Sources: Central Bank of Chile and National Statistics Institute (INE). Figure 6  CPI inflation (1) (annual change, percent)  CPIEFE inflation (1) (2) (annual change, percent)  10  10  10  8  8  8  8  6  6  6  6  4  4  4  4  2  2  2  2  0  0  0  0  -2  -2  -2  -2  -4  -4  -4  -4  07 08 09 10 11 12 13 14 Jun.2012 Report  10  07 08 09 10 11 12 13 14 Sep.2012 Report  (1) Gray area, as from third quarter of 2012, shows forecast. (2) Consumer Price Index excluding foodstuffs and energy. Sources: Central Bank of Chile and National Statistics Institute (INE). BIS central bankers’ speeches  11  Table 1 International baseline scenario assumptions 2011 (e) 2012 (f) Report Report Mar. 12 Jun. 12 Growth  Report Sep. 12  2013 (f) Report Report Mar. 12 Jun. 12  2014 (f) Report Report Sep. 12 Sep. 12  (annual change, percent)  Trading partners World at PPP  4.1 3.8  3.8 3.3  3.6 3.2  3.5 3.1  4.2 3.9  3.9 3.6  3.8 3.6  4.3 4.1  United States Eurozone Japan China India Rest of Asia (excl. Japan, China & India) Latin America (excl.

In our Report’s baseline scenario we forecast that in 2012 and 2013 the current account will post a deficit of around 3 to 4% of GDP. These balances contrast with what has been the behavior of the current account in recent years. It is striking because it happens at a time that, despite the complex external scenario, the terms of trade facing our country are favorable. The persistence and expansion of high current account deficits may generate factors of vulnerability for the Chilean economy when facing an external shock. Although an economy’s current account deficit is not a sufficient condition to anticipate a crisis of some sort, it does help increase its probability of occurrence. For example, due to the importance that this variable may have in sovereign risk, external credit conditions and, ultimately, on access to the sources that sustain such deficit. In the past, a significant part of the crises that the country endured have had to do with persistently, high current account deficits. Accordingly, the Board cannot overestimate the importance of closely monitoring the factors underlying our current deficit, in order to prevent the incubation of imbalances affecting the future performance of our economy. However, a big difference with the past is that today our economy has made progress in devising mechanisms to deal with external shocks and imbalances. Thus, as I said before, we need to maintain and permanently improve the macroeconomic pillars that have made  BIS central bankers’ speeches  7  our economy stable and resilient.
Interestingly, if you go finer still, and measure the same sort of variance in sales across individual firms – something our Decision Maker Panel (DMP) survey allows us to do – you find that quite a bit of it has occurred within sectors, not just between them. 15  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  15  One possible reason is that there appear to have been shifts in spending not just across different sectors but also across different parts of the country. We can’t tell from official data, in any timely way, exactly what’s happened to activity in different regions. Firms in the DMP still report weaker demand in urban than rural areas, relative to pre-pandemic levels (Chart 19). Charts 20(a)-(c) plot a few “real-time” indicators of consumer spending – restaurant bookings and Google tracking numbers for different kinds of shopping trips – for London and for the rest of the UK. In all three cases the figures for the capital are still a long way short of pre-pandemic levels, those for other parts of the country close to or some way above it. One would need to do a little more digging to check the point. But it would make sense that more working from home should have reduced consumer demand in city centres and increased it elsewhere. We know that the same has happened to the demand for housing, in the UK and in other countries.

Alternatively, an issuer could sell a bond with a negative coupon rate by providing that, in the absence of timely payment of interest, the omitted interest payment will be deducted from the principal due at maturity. In this case the bond would be redeemed for less than par, depending on the number of unpaid coupons and the magnitude of the (negative) coupon rate. These alternatives have different tax implications, as discussed in a recent report by the Danish mortgage bankers. 6 As one can imagine, these alternatives require a great deal of coordination and legal work to implement. One legal issue is whether, in the case in which bonds are to be redeemed for less than par, the bonds qualify to be used as collateral in various central bank or private arrangements that require collateral; another is whether the decrease in the par value of the bond might trigger a default that would require a writer of credit default swap protection to make payment to the holder of the swap. These and similar operational problems (including the difficulty of modifying security depositories and clearing and settlement systems to manage the calculations and transfers associated with negative rates) can presumably be solved in time. However, they represent expensive transition costs for those people and institutions that must deal with them as rates move from positive to negative. 3. Economic frictions  There are many zero interest rate conventions in society: negative nominal rates, but not negative real rates, reverse the incentives to exploit these conventions.
It is easy to forget how close the world came to a full-blown depression as a result of the financial crisis in 2008. The global financial crisis was remorseless in the wake of destruction that it unleashed upon the economy and society. The cumulative loss of output since the crisis is estimated to be 25% of one year’s world gross domestic product 1. For the US alone, estimates of the output loss from the crisis vary from $ trillion to $ trillion2. The crisis revealed deep fault lines in the financial system: financial institutions that leveraged themselves to the hilt (as much as 40 dollars of debt to 1 dollar of equity) and had severe mismatches in liquidity; lax underwriting standards, made worse by conflicts of interest in banks originating mortgages; an opaque OTC derivatives market, leading to rapid contagion when liquidity suddenly dried up. The Financial Stability Board (FSB), working closely with standard-setting bodies, put in place 1/9  BIS central bankers' speeches  over the last eight years a comprehensive set of regulatory reforms to address these fault-lines. The aim is to make the financial system less prone to crisis and more resilient in the event of crisis. There are three key thrusts. First, strengthening the banks. This is being done through the Basel III reforms, increasing capital buffers, setting liquidity requirements, and constraining leverage. Second, making derivatives markets safer. This is being done through requirements for trade reporting, central clearing, and margining. Third, tackling the too-big-to-fail problem.

Inflation, on the other hand, continues its downtrend in May, and although we see inflation numbers turning negative, the current uptick in commodities and asset prices, together with signs of greater stabilization in the real sector, help lessen the concern regarding deflation risk. Against this background, the Monetary Policy Committee in its meeting on May 20th held the view that monetary policy has been substantially eased and the current policy rate at 1.25 percent remains supportive of the economy. Two implications must be drawn from this decision. First, given the low policy rate and the ample availability of liquidity, more gains could be made by ensuring that, at the current policy rate, the benefits of past rate reductions are passed on more fully to consumers and the private sector through corresponding adjustments in the banking system’s interest rates. The second implication is that, while the  BIS Review 76/2009  1  emerging signs of stabilization are positive and are consistent with the developments on a worldwide basis, they must be treated with caution given that the current state of the global economy and financial markets are still far from normal. Hence, the MPC will continue to monitor closely the uncertainty surrounding both domestic and external economic conditions, and stand ready to implement appropriate monetary policy to support economic recovery in the period ahead. Turning now to the banking sector. The Thai banking sector was able to weather the impact of the global financial crisis with a relatively strong initial position.
Indeed, in the Committee’s Summary of Economic Projections released about a week ago, most participants anticipated that the unemployment rate would return to its long-run neutral level by the end of 2016 and that inflation then would be in the range of 1–3/4 to 2 percent. A balanced approach to monetary policy Now let me turn to my views on monetary policy. I can’t speak to my FOMC colleagues’ forecasts and how they interact with their views regarding appropriate policy. But, for my part, I think it is more likely that we will achieve our employment mandate before inflation is clearly headed back to 2 percent. Conceptually, this could raise a policy dilemma – achieving our inflation objective would call for strong accommodation, while achieving our employment target usually would call for earlier policy normalization. However, the story is even more complicated than that because important risk factors also come into play. In some ways the insight from Nobel laureates Lars Hansen and Tom Sargent regarding robust control evaluations help form my assessment. 13 I see two important and divergent ways my forecast could go wrong. One is that I may be overestimating the underlying strength in the real economy and its ability to exit from the ZLB. Guarding against this risk calls for a more patient removal of accommodation. The second is that I may be wrong about the inflation outlook, and we could be poised for a much stronger rise in inflation than I am forecasting. This risk calls for more aggressive rate hikes.

4  Specifically, the trends generated by Chicago Fed economists’ preferred models are very close whether they are estimated using data through 2002, 2007 or 2014. 5  See, for example, Acemoglu and Autor (2011) and Charles, Hurst and Notowidigdo (2013). See Shierholz, Mishel and Schmitt (2013) for a skeptical view. An alternative explanation is based on changes in the use of social safety net programs, especially disability insurance (DI), that are partly cyclical in nature. The DI rolls have been increasing throughout this business cycle, although they have been on the rise, more or less uninterrupted, since the 1990s (Autor, 2011; and Burkhauser and Daly, 2011). The DI program tends to be cyclical partly because eligibility standards ease amid deteriorating labor market conditions (Mueller, Rothstein and von Wachter, 2013). That is, people with moderate disabilities are more likely to qualify for the DI program when there are fewer suitable jobs available. 6  The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings. 7  The hiring rate stood at 4.0 percent at its 2006 peak and fell to as low as 2.8 percent in 2009. Today, it is 3.5 percent. BIS central bankers’ speeches  3  University of Maryland, estimate that the overall effort that firms actually are putting into filling a job vacancy fell by over 20 percent during the recession.
BIS Review 21/2009  15  Chart 6 : All hands to the pump  Bank of England  Stabilisation  Equity & Efficiency  Regulation  FSA  HM Treasury  Chart 7 : Stylised Value at Risk Chart 8: The Great calculations, pre and post crisis historical context 20  VaR Pre Crisis  18  VaR Post Crisis  Stability  Density 0.60  150 years of data 10 years of data  16  in  0.50  14  0.40  12 10  0.30  8 6  0.20  4  0.10  2 0 1  16  2  3  4  5 6 Banks  7  8  9  0.00 -15  -10 -5 0 5 Annual GDP Growth (%)  10  15  BIS Review 21/2009

If the fixed-income market is to perform its important function, more is needed than participants who set prices for the various assets. There must also be participants who trade actively at those prices. Neither must the counterparty risks be perceived as unduly high because that may deter participants from trading. Moreover, the market must be capable of handling large volumes without this by itself having an appreciable effect on prices. In other words, the market should be adequately liquid. Why is liquidity important for monetary policy? The answer is that in a liquid market, relevant news shows up quickly in interest rates. An adjustment of the Riksbank’s repo rate, for example, has a rapid pass-through to the short market rates, as well as to somewhat longer rates. This applies, of course, in so far as the repo rate adjustment takes the market by surprise. If market participants instead understand how the Riksbank interprets new information in the form of macroeconomic outcomes, they can draw conclusions about the Riksbank’s future actions. News is then reflected in the formation of interest rates at the time when the macroeconomic outcomes are known. The relevant interest rates also react quickly to various forms of information from the Riksbank. Somewhat longer interest rates may be affected, for instance, when we publish a repo rate forecast, a so-called interest-rate path that presents the Riksbank’s assessment of the future development of the policy rate. The conditions for good market liquidity include low transaction costs, management of counterparty risks and market transparency.
The second element is for supervisors to conduct independent reviews of a bank’s capital adequacy relative to its risk profile, while the third is to help improve the ability of market forces to exert discipline on management behavior. These last two elements, which I will address in more detail in a moment, have been adopted by the Basel Committee as key parts of our proposal to revise the international standards on capital regulation. Risk-focused supervision In terms of the "risk-focused" approach to supervision, many of my colleagues would agree that what makes bank supervision so challenging is the need to keep pace with such a dynamic, fast-moving, and diverse industry. Consequently, supervision must be adaptive. The banking industry is intensely competitive and firms must constantly identify new markets, new products, and new ways to do business. Innovative products and technologies can quickly alter a bank’s exposure to risk. Continuous innovation in the industry and increasingly rapid changes in risk profiles demand that supervisors, too, keep up with the latest developments and work to anticipate them to ensure that our regulatory framework remains relevant and timely. Likewise, supervision needs to be flexible. We all know that the banking sector encompasses organizations that vary greatly in scope, size, and risk appetite, so it’s obvious that regulations that are useful for small, community mortgage banks will not apply equally well to massive, multinational trading banks, and vice versa.

Supervisory review of capital Supervisory review and market discipline are two other elements that can create incentives for responsible behavior, and are of such importance to contemporary supervisory thinking that they have also been adopted as two of the three "pillars" of the Basel Committee’s proposal to revise the international standards on bank capital requirements. There’s been a good deal of public discussion about the first pillar, in which the Committee recommended changes to the guidelines that set minimum capital requirements for banks. Tonight I will concentrate on the importance of the other two in promoting financial stability. Adequate capital is, of course, the foundation of a safe banking system, as it provides banks with a "cushion" against unexpected losses. Supervisors aim to ensure that banks set aside sufficient capital relative to the underlying risks that each institution faces, including whether the banks are addressing the relationship between different kinds of risk. This will be no easy task, as banks under the new Capital Accord will increasingly rely on their own internal models to determine the kinds of risk they face and to what degree. The Basel Committee proposed that supervisors review the methodologies through which banks set their capital levels to ensure that banks have an incentive to develop effective processes for aligning their capital levels with their risks.
We will then have detailed data on GDP for the third quarter, preliminary data on the balance of payments for the entire 2019, as well as current economic statistics for December and first data on inflation in January. We will adjust our mid-term forecast based on this information. Winding up, I would like to get back to the signal of our future actions. We have said today that we will consider the necessity of a further key rate reduction in the first half of 2020. Noting that, after similar signals in the past, it was twice that we cut the key rate already at the next meeting, namely in October and today, and anticipating your clarifying questions, I would like to point out the following. This wording means that we still see room for a slight decrease in the key rate. But both in February and at the next meetings we will comprehensively assess the reasonableness and relevance of such a decision taking into account the entire range of new data that will be available by that time. Our signal does not imply that we will necessarily lower the key rate in February or in the first half of 2020. A further key rate cut will become possible only if our analysis confirms that this is needed to bring inflation back to the Bank of Russia’s 4% target. 3/3  BIS central bankers' speeches

In fact, the average inflation around the world increased from 3.5 percent in 2006 to 4.8 percent in 2007 and to 5.5 percent in January 2008. In this environment Turkey was able to reduce inflation by 1.3 percentage points in 2007. In fact, this was the sharpest drop among 60 major developed and emerging countries. The disinflation process is even more pronounced in core inflation, which excludes energy and food prices. It stood at 4.36% as of February 2008. The favorable outlook in core inflation indicators despite the surge in energy and food prices has allowed the Central Bank to cut policy rates since September 2007. The cumulative rate cut reached to 225 basis points as of February 2008 bringing the overnight borrowing rate to 15.25% from 17.50%. The timing of further easing depends on developments in global markets, demand conditions, fiscal policy performance and other factors affecting the medium term inflation outlook. According to the forecasts of our January 2008 Inflation Report, the year-end inflation may stay above the target in 2008, but within uncertainty band, due to factors outside the control of monetary policy such as energy and food prices. The mid-point of our forecast for 2008 is 5.5%, whereas the year-end target is 4%. However, inflation is forecasted to converge to the target in 2009 and come down to 1.8-5.5% range with 70% probability at the end of 2009.
Within the first group fall all those challenges in 2014 that were not at all unexpected. We have commented these challenges in previous years. Thus, for instance, the forecasts that this year also the economic growth would not accelerate, have materialised. That has held back the quality of bank assets from improving more tangibly. Accordingly, loan demand from enterprises and households has stayed weak. As a result, for yet another year, the banks’ profitability has been subdued and their possibilities for income from lending, i.e. their core activity, have remained limited. Also expected were the tasks related to the transposition into the Bulgarian legislation of the Capital Requirements Directive and the Capital Requirements Regulation adopted in 2013 by the European Parliament and the Council of EU. This time last year in my statement before you I qualified this as a kind of a “supervisory revolution” and the largest one-off change to have occurred in our supervisory framework over the last more than 15 years. Earlier this year, amendments were adopted in the Law on Credit Institutions and in the regulatory framework, including by dropping out a few key BNB ordinances, Ordinance No 9 being one of them which governed the specific provisions for credit risk. In place of the specific provisions allocated until then, the banks made additional accounting provisions under the International Financial Reporting Standards (IFRS), thus reducing the book value of loans past-due by more than 90 days.

We have proved how our country, business and society have a strong institution they can rely on as a pillar of stability and for protecting the long-term public interest, an institution that does not give in to pressure and opportunistic interests. On a day like this, when we normally weigh up past events, our thoughts could go further back in time, long before the worries of this passing year. Some events can often be more wisely judged when looked at from a longer historical perspective. If we take such a look back into the 135-year history of the BNB, we would see many examples demonstrating the strength of our central bank and its insusceptibility to coteries’ intrigues and shallow trivial debates (which only absorb energy from the public creative resource, before vanishing in time). But our history has witnessed obscurantist episodes too, when the BNB was suppressed to obey political or other temporary interests. The implications of such interventions have always been tragic for the country. Here is one brief example. On the famed date of 9 September 1944 the BNB Governing Council set a “buying” rate for the Soviet rouble (15 levs for 1 rouble) after being instructed on the telephone by the then Minister of Finance. Two days later, on 11 September 1944, the government ordered the BNB to stop buying the  2  Basel Core Principles for Effective Banking Supervision of 14 September 2012.