samchain/econo-pairs-v1 huggingface dataset:
The level is expected to remain high throughout the projection period. Activity in the petroleum sector will have spillover effects on the mainland economy, initially on the shipbuilding industry and the construction sector. The scale of petroleum investment and its spillover effects are highly uncertain. The last time petroleum investment showed a sharp increase, in 1997/1998, growth was substantially stronger than had been assumed. An upturn occurred in the Norwegian economy as a whole at the same time. The unexpected increase in petroleum investment contributed to an economic upturn that was substantially stronger than projected. If oil prices rise further or remain at the current high level for a long period, petroleum investment may again amplify the cyclical upturn more than projected. Inflation among our trading partners is expected to be low over the next few years. It is likely that high prices for oil and other commodities will continue to push up prices for goods where wages account for a small portion of total costs. On the other hand, growth among most of our main trading partners will probably be too low for idle resources to be utilised in the next few years. Particularly in the euro area, wage growth is likely to be low as a result of moderate economic growth and high unemployment. Overall, it would appear that international price impulses via consumer goods to the Norwegian economy will remain negative this year and next. There is no indication that growth in imports from low-cost countries is declining.

However, we assume that households will spread consumption over time so that the savings ratio will continue to fall in spite of an increase in interest rates. Growth in housing investment is expected to ease through 2005. However, the projection for housing starts is also very high for 2005. Such a high level of housing starts over several years probably means that more dwellings will be constructed than implied by underlying demand. As a result, housing investment is expected to decline after a period. Higher interest rates and weaker developments in the Norwegian economy may also lead to a fall in residential construction after a period. The upturn in mainland fixed investment is broadly based. Stronger profitability, higher capacity utilisation and solid export growth will contribute to continued investment growth in goods-producing industries. Demand for services is expected to continue to grow for a period ahead with an attendant  BIS Review 18/2005  5  increase in investment in service sectors. When growth in the economy gradually slows down, investment growth will probably slacken. Mainland exports of good and services from mainland Norway will also benefit from solid global growth this year. Later in the period, a continued loss of market shares as a result of high cost levels will dampen export growth. Unemployment is expected to decline this year and next. In subsequent years, growth in demand and output is expected to ease, and unemployment may edge up again when capacity utilisation approaches a more normal level.
The real exchange rate is the one that is most important to the real economy; the nominal exchange rate should primarily be regarded as an asset price that affects the real exchange rate over the relatively short term. As Figure 5 shows, the nominal and real exchange rates have co-varied closely during the inflation-targeting regime. The explanation for this is that, as I mentioned, exchange rates that are determined freely by the market tend to be volatile. At the same time, most of Sweden’s trading partners have monetary policy frameworks resembling our own, so inflation rate differences are generally fairly minor. The nominal exchange rate can change rapidly, but prices generally move more slowly. All in all, this means that short-term fluctuations in the real exchange rate, to a large extent, are driven by variations in the nominal exchange rate. Movements in the nominal exchange rate were smaller before 1992, when Sweden had a fixed exchange-rate regime, even if the devaluations carried out during the 1970s and 1980s led to relatively large fluctuations. However, even during periods with fixed nominal exchange rates, large fluctuations took place in the real exchange rate. These were driven by  BIS central bankers’ speeches  7  differences in inflation rates between Sweden and the rest of the world. Between 1982 and 1992, the real exchange rate strengthened markedly, with Swedish competitiveness being undermined considerably as a result.

Figure 7 shows model simulations of the effects on the CPIF and unemployment, according to the main scenario’s repo rate path and according to the repo rate path I voted for, under the assumption that foreign interest rates will be lower  BIS central bankers’ speeches  9  than in the forecast, particularly towards the end of the forecast period.14 My preferred repo rate path, which goes up to 3.25 per cent at the end of the forecast period, gives a lower unemployment forecast than does the main scenario’s repo rate path. It may seem that the target fulfilment of the CPIF forecast is worse, as it lies above 2 per cent towards the end of the forecast period. However, my assessment is that this is an overestimate of inflation. Inflationary pressures are influenced by resource utilisation, and it can probably be expected that the level of resource utilisation that is consistent with unchanged inflationary pressures will actually rise during the forecast period. In deep recessions, it is usual for the functioning of the labour market to be impaired initially, as typically the jobs that have disappeared differ from those arising once the economy has recovered. However, eventually it does start to function normally. In that case, perhaps inflationary pressures will be significantly lower towards the end of the forecast period than is shown by these simulations.
The Rt Hon Sir Edward George: International efforts to improve the global economy Speech by The Rt Hon Sir Edward George, Governor of the Bank of England, to the Swiss Institute of International Studies at the University of Zurich, 7 May 2001. *  *  *  A week ago I returned from the annual Spring Meeting of the IMF in Washington, and I thought that I might discuss with you this evening where we are in our collective international efforts to improve the functioning of the global economy. In particular I will touch upon two broad areas: first, the approach to overall economic management; secondly, the approach to strengthening the international financial system. But I should like to begin with a few words about the process of international monetary and financial co-operation. Finance Ministers and Central Bank Governors, as well as their Deputies, spend a good deal of time at meetings in various different international fora. I am often asked after one or other of these meetings "what exactly did you decide?" And more often than not, the answer is that we did not actually take any specific decisions. We exchanged opinions, and often agreed that we needed to do more work on this or that issue which we could review and debate at a subsequent meeting. You could be forgiven for thinking that the process of reaching international agreement on anything moves at a snail's pace. To a degree that is true.

Nominal interest rates on loans and deposits are rising. However, given the current level of inflation and inflation expectations, monetary conditions remain neutral in the meantime. This is evidenced by the persistently high growth rates in lending, as well as the still slow rise in deposits. Businesses and households continue to demonstrate high demand for loans. Nonetheless, the increase in unsecured consumer lending has started to slow down, which was promoted by additional macroprudential limits on high risk loans imposed on 1 October. As regards ruble-denominated time deposits, their growth in November—the first ten days of December continued, but its pace is still as slow as in October. On the one hand, higher interest rates make time deposits a more attractive savings instrument. On the other hand, banks artificially limit depositors’ opportunities to use these new, more profitable offers. Banks offer different deposit terms for the so-called ‘old’ and ‘new’ money. There are barriers in the form of fees that depositors need to pay to transfer their funds from one bank into another. We believe that such differentiation, or to be more exact, discrimination is inappropriate and have already proposed a number of initiatives to eliminate it. We hope that legislative authorities will support 2/4  BIS central bankers' speeches  our ideas. This will not only protect bank customers’ rights, but will also make the deposit channel of the monetary policy transmission mechanism more efficient in the future. Speaking of risks, proinflationary ones still prevail.
10 We used to think that the output gap, as a proxy for marginal cost, is what affects inflation, but the Chilean experience was more of a large swing in the growth of domestic demand rather than output. However, the connection from domestic demand to inflation is less clear than that of the output gap. Finally, the degree of openness and competition in the Chilean economy may increase the sensitivity of prices to demand conditions. More work would have to be done to fully understand the dynamics of inflation, but still the inflation targeting framework has been very useful to conduct monetary policy and to stabilize inflationary expectations. 6. Concluding remarks  Although more often than not, central banks have an explicit financial stability objective, for many years, and within a context of strong GDP growth and sound balance sheets of banks and firms, this was a second-class issue. Now things have changed dramatically. As of last year, financial stability became the protagonist in monetary policy management in developed countries. 11 Central banks need to oversee price stability and financial stability. To pursue two objectives, one instrument, namely the interest rate, is not enough. Indeed, a well functioning financial system strengthens the transmission mechanism of monetary policy. There may be exceptional occasions in which both objectives may collide, for example when monetary policy requires an increase in the interest rate, while financial stability calls for a reduction. Another example could be a bubble in the exchange rate with high inflation.

Towards midyear it was even possible to raise the interest rate substantially to tackle a surprise rise in inflation that was much deviated from the target. This was so thanks to the fact that the purchase of dollars was being carried out mechanically, despite a significantly depreciated exchange rate after the intervention. The purchase of foreign currency was concluded prematurely due to global tensions in global liquidity in dollars in September of last year. The capacity of the Chilean economy to subsequently deal with a significant exchange rate depreciation, with monetary easing prospects and reduced inflationary pressures, is proof that there was no inconsistency between the decision to intervene and the conduct of monetary policy (Figure 2). It also shows that the flexible exchange rate regime adopted early this decade has the economy well prepared to absorb exchange rate fluctuations without the turmoil that used to come with them in the past. 4. Bubbles, exchange rates and capital inflows in emerging economies  Latin America went through a period of large capital inflows in the first part of the 1990s (Calvo et al., 1996). We cannot disregard the possibility that after the current crisis is over, there will be a reemergence of inflows to emerging economies. Therefore, there could be strong pressures for a sharp increase in the valuation of domestic assets, with a potential bubble in their prices, and this bubble could take the form of an exchange rate appreciation.
More recently, the current financial crisis serves as a reminder that some aspects of market development may be taken too far, where, for example, they privilege the process of intermediation and neglect the financial and economic realities that lie behind it. The caution inculcated by the Asian financial crisis, and a natural conservatism in many markets in this region, seem to have helped us avoid the worst excesses we have seen in more developed markets. Looking more positively to the future, this region is poised to become the centre of economic growth and wealth creation in the world. Indeed we are already a long way down that path. So far, a great deal of the wealth created has been diverted into markets elsewhere in the world. Market development in this region, on a foundation of efficient infrastructure and sound regulation, will help retain more of that wealth for investment within the region. This evening‘s gala event celebrates the 40th anniversary of one of the world’s foremost financial publications. It is therefore only proper to say something about the vital role of the media in financial market development. The media can, I think, be seen as a kind of complementary, parallel infrastructure to the financial infrastructure that I have briefly described. The media are, of course, more visible, and much more diverse, but they also make use of similar technologies, whether advanced or traditional, and at various points they intersect with the financial infrastructure.

With the rise of consumerism, the need to create informed consumers is even more important. As the financial sector continues to rapidly evolve, offering sophisticated products and services to cater for greater and more diverse needs, consumers need to become even more financially savvy. While the consumer has an important responsibility to become more informed, financial service providers, the regulators and the authorities have an important role to provide the enabling and conducive environment that nurtures consumer empowerment. Indeed, consumer empowerment begins with financial awareness and consumer education. This in part can be achieved through greater disclosure and by  BIS Review 129/2007  1  increasing the education outreach to consumers thereby enhancing their ability to make informed financial decisions. Ladies and gentlemen, This exhibition aims to provide an enabling platform for consumer empowerment. MYFex2007 is a conscious effort to raise financial awareness by bringing together the various entities in the financial system that includes the industry, regulators and other agencies that provide information, the avenues for redress and financial advice with the aim of creating financially informed consumers. In essence, this one stop centre creates a comprehensive opportunity for consumers to improve their financial literacy and for the financial players to engage the consumers. An important thrust of our policies at the Central Bank is financial inclusion. This is to ensure that every economic activity, geographical region and segments of society have access to financial services thereby promoting a more balanced growth.
For instance, foreign direct investment does not usually jeopardise economic stability, while short-term movements and carry trade are riskier. It can be argued that Iceland had gone too far in financial integration in the years before the financial crisis. In part because of this, the Central Bank recommended, in its 2012 report entitled Prudential Rules Following Capital Controls, that before the capital controls are lifted, restrictions should be placed on financial firms’ foreign exchange risk and their ability to expand their foreign currency balance sheets with the associated maturity mismatches. Restrictions would also be placed on foreign-denominated borrowing by households, firms, and municipalities without income in the borrowed currencies. These ideas are being developed and honed, and some of them could be implemented with the entry into force of new liquidity and foreign exchange balance rules that the Central Bank intends to issue this year. It has been said that a reassessment of the monetary policy framework must take place before the capital controls can be lifted in full. This is perhaps not as critical as it might seem, however, as countries with unrestricted capital flows have various kinds of monetary policy framework. Nonetheless, it is necessary to review our monetary policy, and the Bank has published reports on this topic in the recent term, one entitled Monetary Policy After Capital Controls and the other entitled Iceland’s Currency and Exchange Rate Policy Options.

Since last November, the three-month Libor had been held at the desired level of 0.25%. However, from mid-May it began sinking rapidly and is currently well below that level. The fall in the rate is a sign that the banking system is currently holding a very large amount of liquidity. My colleague, Jean-Pierre Danthine, will talk about this in greater detail. Interest rates on the capital market have also fallen. In June, yields on 10-year Swiss Confederation bonds fell to a record level. The low capital market interest rates reflect a higher demand for Swiss government bonds. In addition, long-term inflation expectations continue to be firmly anchored. Private companies are also benefiting from low interest rates on capital markets. Credit risk premia have fallen further and rates of interest on bank loans are also at a very low level. Since the last monetary policy assessment, the Swiss franc has appreciated against the euro. It has simultaneously depreciated against the US dollar. As a result, the trade-weighted external value of the Swiss franc has only slightly increased. The expansionary monetary policy is also reflected in the monetary aggregates. Thus, the monetary base rose to a record CHF 128.6 billion in May, and growth of the monetary aggregates is continuing at a high level. For example, M2 was growing at 10.2% in May and M3 at 7.1%. Credit growth also increased further. After slowing to 2.7% in September 2009, the rate of growth increased to 4.1% in April.
European heads of state agreed to the principle of a single supervisory mechanism at the end of 2012, and we are in the process of actively preparing its implementation. By November, the main banks in the euro area will be supervised by a federalized system headed in Frankfurt. A Supervisory Board will be established to plan and carry out the ECB’s supervisory tasks, undertake preparatory work, and propose complete draft decisions for adoption by the ECB’s Governing Council. Moreover, the entire European banking system, including Hungary of course, will be supervised on the basis of a single set of principles – the Single Rulebook – which has been compiled by the European Banking Authority. This is a huge step towards a more unified and consistent European banking system, and one that is therefore more robust and efficient. The move towards a Single Supervisory Mechanism is firmly on track. Last October, we reached another important milestone with the announcement by the ECB that European banks will be subject to a Comprehensive Assessment prior to the set up of the SSM in November 2014. 2  BIS central bankers’ speeches  This exercise is now underway. We must be aware that the exercise is an unprecedented one: about 130 participating banks – including 13 French banking groups – representing 85% of the total assets of European banks, will simultaneously undergo a thorough asset quality review (AQR) using a common methodology, and this will be followed up with stress tests this summer.

That went well beyond constructive pressure to improve efficiency to destructive agony. We’ve been only too well aware of that - we could hardly not have been; and we’ve not been insensitive to it either. We have consistently taken account of the unexpectedly persistent strength of the exchange rate in both our forecasts and in our monetary policy judgements. But when you come right down to it, for as long as economic conditions between one country and another diverge, whether for cyclical or structural reasons, there is a choice. Countries can either aim to stabilise their respective domestic economies, accepting that that may mean exchange rate volatility, or they can aim to maintain exchange rate stability, accepting that that may destabilise their respective domestic economies. These are the horns of the uncomfortable dilemma we have been on. I have no doubt, in terms of the macro-economy as a whole, that we have been right to persist in aiming to stabilise our domestic economy - the facts speak for themselves. It is possible - even perhaps likely - that our dilemma may now become less acute, at least for a time as the euro strengthens to a more sustainable level. Our best chance of maintaining that happier position - if indeed it occurs - is to persist in domestic stabilisation and structural reform alongside our European partners, but it is difficult to be confident at this stage that the dilemma will not re-emerge. BIS Review 50/2000  2
But it was now nevertheless clear that it was a total renovation that was needed. 4 [16]  In the Swedish paper Dagens Nyheter on 20 November – the day after the defence of the fixed exchange rate was abandoned – it was announced that an expert group had been appointed with Professor Assar Lindbeck as chairman. The aim was to tackle the long-term economic problems and, in Assar's words, to try to answer the question: “What is it about the Swedish economy that makes it run out of control like this?”6 The group, which came to be called the Lindbeck Commission, was to present proposals for how to tackle problems, which Assar described as “the low growth rate, the exploding public expenditure, the budget deficits, the constant trends towards cost inflation and the slow productivity growth”. Necessary changes in the framework… Unfortunately, it often seems that a crisis is needed to bring about real and profound changes. The major changes in the economic policy frameworks that we made as a result of the crisis in the early 1990s are well known so I will only mention them briefly here. The inflation target Instead of defending a fixed exchange rate, the task of monetary policy from now on would be to keep inflation low and stable. In January 1993, the Riksbank announced that an inflation target of 2 per cent would enter into force with effect from 1 January 1995. Gradually, changes in the monetary policy framework confirmed the new order.

Peter Praet: The ECB’s asset purchase programme – the impact so far Speech by Mr Peter Praet, Member of the Executive Board of the European Central Bank, at the Eurofi conference, Luxembourg, 9 September 2015. *  *  *  The ECB’s expanded asset purchase programme has met with our initial expectations. First of all, it has strongly signalled the ECB’s commitment to deliver its medium-term price stability objective, which has in turn been reflected in an upward shift in inflation expectations at all horizons. In keeping with this, any second round effects on inflation from the steep drop in oil prices last year appear to have been forestalled, and the tightening of medium-term real rates we saw towards the end of last year has been reversed (though the path of real rates implied by markets has recently steepened noticeably). More generally, the signalling effect of the APP has been visible in solidifying business and consumer confidence underpinning a broadening economic recovery. The expanded APP, together with our credit easing package launched in summer 2014, has also had a positive impact on both market and bank credit dynamics. The cost of marketbased debt fell to historically low levels in the early part of 2015, and though it has risen in recent months, financing flows have remained robust. This implies a “first order” monetary policy effect from our interventions.