samchain/econo-pairs-v1 huggingface dataset:
In our communication, we seek to be open about our response pattern. Many important economic decisions depend on economic agents’ expectations concerning the future. The inflation target and our response pattern influence and can change their expectations. The task of stabilising inflation is facilitated when households, firms and market participants have a good understanding of how monetary policy works and how Norges Bank sets the interest rate. Chart: Forecasts of inflation and the output gap in the June 2011 Monetary Policy Report The monetary policy response pattern can be communicated in several ways. In our Monetary Policy Report, we present a chart with our forecasts of inflation and the output gap. Combined, they provide a picture of key assessments underlying our interest rate decisions, and hence our response pattern. The interest rate is set so that inflation and the output gap move in balance. If inflation is well below target, the interest rate will normally be low so that the output gap increases and eventually pushes up inflation. Inversely, if inflation is too high, the interest rate will be raised so that the output gap narrows and inflation recedes. As shown in the chart, in our latest Report from June we presented a scenario where the output gap increases somewhat further ahead, with the downturn in the wake of the financial crisis being followed by a mild upturn. The low level of inflation would then move up to target.

Moreover, the effect of an interest rate change will depend on whether the change is anticipated or comes as a surprise. For example, a lower-than-expected interest rate increase might easily be perceived as an expansionary monetary stance, even though the rate is actually being raised. Expectations may also result in a change in market interest rates well in advance of an actual adjustment in the key policy rate. This may influence how quickly an interest rate change feeds through to the economy. Furthermore, the impact will depend on the expected duration of the interest rate change. If the Bank were to embark on a totally new monetary policy course, we would have to assume that this would result in a different path for the economy than if an interest rate hike occurs one month earlier than planned. Chart: VAR model  5  Unemployment measured according to LFS. 6  Mainland hourly wage growth from quarterly national accounts. 7  Adjusted for tax changes and excluding energy products, seasonally adjusted figures. 4  BIS central bankers’ speeches  In order to analyse the effects of the interest rate, we need to study more than pure correlations. We need an analytical apparatus that allows the interest rate to be endogenous. A vector autoregressive model (VAR) model on Norwegian data quantifies how the interest rate has reacted historically to other key economic variables. The model is based on statistical relationships between GDP, interest rates, exchange rates and inflation, taking into account that variables may be interdependent.
The minutes also described asset sales as part of the strategy, indicating that this step would likely occur relatively late in the normalization process. From the perspective of the balance sheet and the stance of monetary policy, sales accomplish the same thing as redemptions, as they also shrink the balance sheet over time. The minutes indicated that such sales are likely to be gradual and predictable, which makes them even more similar in nature to redemptions. Together, the combination of asset redemptions and asset sales, once underway, should put the size of the portfolio on a path to a more normal level over several years. Thus, they represent an important part of the normalization of the policy stance. However, if the approach follows the gradual and predictable path described by the minutes, one can think of this adjustment as a relatively passive part of the policy tightening. In these circumstances, adjustments to the federal funds rate would generally be the active policy instrument, responding as needed to economic developments. 10 The sequence of policy steps described in the minutes indicates how the size of the SOMA portfolio is likely to be normalized. However, simply reducing the size of the portfolio would still leave its duration at historically elevated levels. The FOMC might decide it was happy with this outcome, or it could decide at some stage to renormalize the duration of the portfolio as well.

I will conclude by extending my appreciation to the organizing committee for extending me the invitation to this dinner. I wish you a very pleasant and enjoyable evening, and look forward to further strengthening the mutually beneficial relationship between Bank Negara Malaysia and the Persatuan. Thank you. 4  BIS Review 151/2010
The inflation target would have risked losing its role as anchor for pricesetting and wage-formation if we had not cut the repo rate in 2014 and 2015. With regard to my thoughts on going forward, I would like to begin with the monetary policy meeting on 10 February. The report presented then stated that resource utilisation in Sweden was assessed to be at a normal level. The members of the Board agreed that the important thing for monetary policy is for the trend in inflation to come closer to the target and to avoid weakening confidence in the target. The upturn in inflation is expected to continue to be fitful and there may be surprises along the way. Whether, and if so how, monetary policy will react depends on the causes of such surprises and how they are deemed to influence the outlook for inflation. We were also agreed that we shall maintain a high level of preparedness for action, even between the ordinary meetings, in case further measures are needed to safeguard confidence in the inflation target. Exactly how tolerant we are with regard to different outcomes may vary somewhat on an individual basis, which is natural on a committee. In my contribution to the debate at the meeting I wanted to say that I now have a greater tolerance for setbacks, in that we now have a more favourable situation in Sweden. I do not see this as advocating a new monetary policy strategy for the Riksbank.

My point is that the global conditions for growth will gradually improve and that the course of inflation will normalise. But this depends on decisions made abroad, which govern the real interest rate that we in Sweden have to relate to. Growth conditions in Sweden also depend on the Swedish economy's ability to constantly transform in an orderly manner. Monetary policy can function as a bridge over to a new normal situation. But the new normal will be determined by decisions that are beyond the central bank's control. 3  Another such period, but one in which completely different challenges arose, was the financial crisis 2008–2009. 4  See the minutes of the monetary policy meeting on 10 February 2016 and SvD Andrén Meiton 9 March 2015. 4  BIS central bankers’ speeches
At the recent 2006 spring meeting, the member countries supported a proposal that the IMF should be given the task of acting more powerfully to correct global imbalances and other threats to financial and economic stability. Today’s threats and risks can largely be found in the interaction, or perhaps the lack of it, between the politics conducted in different countries/regions. Examples here are China’s exchange rate regime, the US current account deficit and the EU’s agricultural policy. The proposal involves the IMF being given a stronger regional and global monitoring role and the possibility to call countries to multilateral consultations. The Fund’s older task of monitoring exchange  11  The Soviet Union and its satellite states were invited to take part, but the regime of the time rejected the offer of membership. Czechoslovakia took part in the IMF from its inception, but was forced to withdraw from the cooperation. BIS Review 35/2006  7  rate developments in particularly systemically-important and large growth countries is also being given a more prominent role. It is also observed in the reform proposal that efficient supervision is not merely a question of correct analyses and high quality advice. It is at least as important to communicate the analysis in a manner that creates confidence and means that the advice is followed. To achieve this, a new communications strategy is proposed, which is based on openness, transparency and a more intense dialogue with society as a whole.

This would subdue growth in Sweden, which has around 40 per cent of its exports to the euro countries. Conclusions and ways forward It would be wrong to say that globalisation is a force of nature that cannot be stopped. However, it would be very costly for an individual country or region to try to remain outside of this process. This alternative does not really exist in practice. That applies in particular to a country like Sweden, which is small and strongly dependent on foreign trade, and integrated with the outside world. At the same time, globalisation brings new demands and challenges. Many of these require global or regional solutions. There are thus two additional paths to take: One is that society and the business sector try to manage the changed conditions that globalisation involves in the best way possible, and one is that Sweden together with other countries/organisations actively works to promote regulatory systems,  6  BIS Review 35/2006  infrastructures, foreign aid and cooperation in the fields that require widespread support. This applies in particular to the global imbalances I have described here. Mobilisation of resources In the domestic field, the challenge for Sweden in future is to develop and renew the business sector so that we can meet the increasingly stiff competition. The general government and local governments will probably be unable to create very many new jobs; Sweden’s demographic situation means that taxes will be used to maintain the level of service and transfers that already exists.
Time will shed more light on the true effects of developments abroad on Chile’s external position and the evolution of domestic balances. For now, it is important that we take the opportunities we have to preserve and enhance the soundness of our economy, but bearing in mind that there are risks and that they are significant. Thank you. 8  BIS central bankers’ speeches  Figure 1 Real exchange rate (*) (index, 1986=100) 120  120  110  110  100  100  90  90  80  80  70  70 88  90 92 RER  94 96 98 00 02 1997-2011 average  04 06 08 10 12 1992-2011 average  (*) August figure includes information up to 30 August 2012. Source: Central Bank of Chile. Figure 2 Nominal exchange rate (index, December 2010=100) 110  110  105  105  100  100  95  95  90  90  85  85  Dec. 10  Jun.11 Chile  Australia  Dec.11 N. Zealand  Jun.12 Canada  Source: Bloomberg.

Add to this the discussion in the United States to prevent fiscal adjustments from being triggered in 2013. If attempts to reach agreements are unsuccessful, this economy’s GDP growth could fall significantly and tensions could increase in financial markets. In the emerging world, the biggest risk is a deepening of signs of economic slowdown. On aggregate, the world growth forecast does not divert from the average of the past 15 to 20 years, but this has been sustained by the expansion of the larger emerging economies. Particularly preoccupying is the performance of China, due to its weight in the world economy and its relevance in the evolution of the prices of copper. Should it post a sharper deceleration, global growth would weaken further, with intensified effects on commodity exporting economies like Chile, which are still growing at high rates. Another possibility is for supply-side factors to intensify recent increases in the prices of some commodities, especially fuels and grains. Locally, medium-term inflationary risks are still present. The recent trajectory of the world prices of fuels and some foodstuffs could rapidly pass through to inflation, all the more so considering the current state of output gaps. In addition, if domestic output and demand remain as dynamic even or more so, they can further intensify the usage of installed capacity pressuring inflation away from the target. At the same time, this could also could result in a widening of the current account deficit that could create vulnerability factors in the economy in a complex global environment.
As a result of these various failings globally and domestically the financial system acted as an amplifier, intensifying the UK economic downturn at great economic and fiscal cost. Budget 2009 detailed the largest fall in UK GDP since the Second World War and forecast a near doubling in the fiscal debt ratio in just four years, from 36% of GDP in 2006-07 to 69% in 2010-11. In order to underpin the UK’s economic and fiscal position, the Government took the unusual step, at least in public finance terms as I am sure this expert audience would appreciate, of making, what amounted to, a provision of up to £ or 3½% of GDP, for expected losses on its many and various interventions in the UK banking system.3  Clearly, the options authorities had to manage the failure of financial firms were insufficient, which led to some difficult and disruptive choices. The lack of a credible resolution framework is self-evident in the scale of taxpayer bailout. Of course, in the absence of the counterfactual, it is impossible to precisely quantify the impact of the lack of a credible regime. But I agree with my colleague, Jon Cunliffe, that the negative impact was likely to be considerable.4  Transparency around what is likely to happen if a bank fails is a fundamental complement to a credible resolution regime. Authorities previously relied upon it being ‘constructively ambiguous’ as to whether or not they would bail out a failing bank.

Indeed, an even stronger version of this argument is that the very success of the regime contributed to the decline in market participants’ perception of risk and encouraged them in the leveraged acquisition of risky assets. According to this view, the MPC ought to put independent weight on credit and asset price developments and should have kept policy tighter during the years leading up to the crisis. That would have generated an undershoot of the inflation target in the near term but reduced the likelihood of a disruptive unwinding of the financial imbalances further out. The first point to make is that interest rates affect the whole economy through a variety of channels. Raising Bank Rate in order to curb a credit boom would be fine if that credit boom was also associated with excessive demand growth and overheating in the real economy. But that, by and large, was not the case during the years leading up to the financial crisis. Raising interest rates enough to have had a material impact on the credit boom would most likely have resulted in an even higher value of sterling, markedly weaker activity and higher unemployment. Would businessmen, households and Parliament have accepted this as a price worth paying to bring down credit growth with the hope of forestalling a hypothetical future financial crisis? I suspect the answer to this would be No, even though equipped with 20/20 hindsight we might take a different view.
A structural change with rising productivity growth may be due to, for instance, a shift in technology. An interesting example is provided by the United States, where the relative price fall in connection with developments in computers and telecommunications in recent decades can serve as an illustration. During the process of adjusting to the new, higher growth path there are at least two, contrary effects that are relevant for monetary policy. One effect is an increase in demand. The impact of this on 2  For an interesting review of aspects of the adjustment process, see Meyer, L.H. (2000), "The Economic Outlook and the Challenges Facing Monetary Policy," Remarks at Washington University, St. Louis, Missouri. The Federal Reserve Board, October 19. BIS Review 30/2001  3  inflation will depend on how the increment to demand relates to the higher potential supply of goods and services. The other effect is a direct damper on inflation. It is often only the latter effect that is highlighted in the public debate. I should like to consider the two effects in turn. Demand rises in the form of higher investment and increased private consumption. The upswing for investment stems from expectations of a higher return on capital. Share prices rise, which facilitates capital procurement. The capital stock is adjusted towards a new level that is expected to match the new and higher rate of potential growth. Private consumption is stimulated via the wealth effects of higher share prices and expectations of higher future household income.

Chart 7: Three-month interbank rates relative to expected policy rates  Chart 8: Three-month UK interbank rate relative to expected policy rates  Sterling  Basis points 250  Basis points Euro 400  US dollar  200  350 300 (d)(e)  150  250  Forward spread on 7 October 2008 (c)  (c) 200 150  100  Forward spread on 20 October 2008 (c)  100  50  50 0 Jan.  Apr. 2007  Jul. Oct.  Jan.  Apr. Jul. Oct.  Sources: Bloomberg 08 and Bank calculations. 0 Jul. 2008  Sep.  Nov.  Jan.  Mar. May. Jul. 09 Sources: Bloomberg and Bank calculations  BIS Review 132/2008  7  Chart 9: Dynamic provisioning  Specific provisions as a percentage of total loans General provisions as a percentage of total loans Total provisions as a percentage of total loans  Upswing  Per cent of total loans  Downturn  0  Time  Table 1: Key actions to improve resilience  • Macroprudential tools are needed to guard against systemic risk • Capital levels need to rise and need to be of sufficient quality • Liquidity standards should be strengthened • Strengthen the legal framework for depositor protection and bank resolution • Better management of cross-border financial institutions • More disclosure, including potential future balance sheet volatility • Developing centralised infrastructures for over-the-counter instruments  8  BIS Review 132/2008
Urban Bäckström: Households, stock markets and the financial system Speech by Mr Urban Bäckström, Governor of the Sveriges Riksbank and Chairman of the Board of Directors and President of the Bank for International Settlements, to the Share Promotion Association, Stockholm, 21 January 2002. *  *  *  Thank you for inviting me to the Share Promotion Association to talk about households, stock markets and the financial system. This means that today I shall not be talking about current monetary policy. First let me note that since the deregulation of financial markets in the 1970s and ’80s, central banks around the world have become increasingly interested in the financial system’s various functions and institutions. One reason for this lies in the system’s central place in society’s infrastructure. Just as it is important that networks for transport, electricity and telecommunications function properly, so is it essential that, for example, payments can be transacted, capital can be saved and channelled to the most profitable investment projects and that both households and firms get help in handling financial uncertainty and risk as well as possibilities of spreading consumption over time. Production and employment are liable to be hit to varying degrees if, for some reason, parts of the financial system do not work as they should or even break down completely. Moreover, experience has taught us that the price of shares and other assets plays a major part in the dynamics of economic growth.

Similar tendencies are to be found in other industrialised countries. So it is not just in Sweden that saving has moved away from traditional bank deposits. One underlying factor is probably demographic. People traditionally tend to save more in the phase of life when their children are old enough to leave home. In that the large birth cohorts from the 1940s reached that age during the 1980s, there was no doubt an increase in the propensity to save for the longer term. Moreover, people today live longer on average than before, which means that they work for a shorter proportion of their lives, so the higher return that often results from long-term saving comes in handy to maintain their standard of living. Changes in tax, transfer and pensions systems also tend to move in the same direction. The fact that rising standards of living and a better yield have boosted households’ financial wealth may also have raised the propensity to take risks. Additional factors may be decreased transaction costs, more access to information and the simpler procedures for share dealing compared with the situation twenty to thirty years ago. Many of these changes have occurred as a result of technical innovations, not least the advent of the internet. Long-term saving requires an ability to manage the associated risks. Share prices fluctuate widely, in marked contrast to the stability of bank deposits.
Low real interest rates in many countries are largely the result of a conscious policy to counteract the international downturn of the past few years. Low real interest rates will in the short term stimulate economic growth and contribute to preventing deflation. Keeping interest rates low for a long period may involve risk, however. Bubbles may develop in markets for both financial and real capital. Lowinflation bubbles are a challenge to monetary policy. One would normally expect monetary policy to be  8  BIS Review 46/2003  gradually tightened as economic growth and inflation returned to more normal levels and that actual interest rates would again correspond more closely with the more theoretical equilibrium interest rate. There is little reason to expect otherwise in the current business cycle, although one might of course raise the question of whether the equilibrium interest rate is still in the range we have believed it to be. In some countries, it could be argued that, in the US for example, the equilibrium interest rate should be higher in the light of strong productivity growth and continued relatively strong population growth. In much of Europe, however, populations are more likely to decline and productivity growth is, if anything, weaker than previously, indicating that the equilibrium interest rate should be lower. Furthermore, since we are referring to a global equilibrium interest rate, shouldn’t developments in China and other emerging markets also play a role?

Mario Draghi: Short address on the occasion of the launch of the Europa series € banknote Speech by Mr Mario Draghi, President of the European Central Bank, at the launch of the Europa series € banknote, Bratislava, 2 May 2013. *  *  *  I mentioned this at the end of today’s press conference, but let me say again that I’m very pleased to be here today to see the launch of the new 5 euro, the first banknote of the Europa series. The new banknote will join 15 billion euro notes already in circulation. They are the most visible and tangible symbol of European integration, used from one end of the continent to the other. With the Europa series, we are giving a face to our currency. A portrait of Europa, a figure from Greek mythology, has been incorporated into some of the security features of the new series. After centuries of division, the European Union was awarded the Nobel Peace Prize last year for its contribution to “the advancement of peace and reconciliation, democracy and human rights in Europe”. We all know that Europe is experiencing some challenging times. Governments and citizens are making extraordinary efforts to put their economies on a sounder footing and to build a more stable future for the European Union. In times like these, it’s important to remember what the Union and the euro have achieved and what they mean in the longer term, especially for young people.