samchain/econo-pairs-v1 huggingface dataset:
We continue to estimate that the economic recovery is grounded on a favorable external scenario, a clearly expansionary monetary policy, the completion of the adjustment of mining and housing investment and the absence of important macroeconomic imbalances. As a working assumption, we assume that in 2018 the economy will receive a fiscal impulse consistent with the current budget, including the adjustments announced by the Administration. Going forward, we assume that expenditure will follow the path of gradual fiscal consolidation defined in the fiscal policy decree just issued by the authority. With these figures, on average our economy will grow above potential in the period 2018-2020, closing the activity gap during the policy horizon, as we projected in the March Report. Also, our estimate for the economy’s potential growth continues to lie between 2.5% and 3% and it will gradually approach trend growth—between 3% and 3.5%—to the extent that the rate of investment recovers, short-term constraints disappear, and resources are reallocated to more productive activities. Come September, as has been the case for some years, we will reassess these estimates. The projected evolution of activity considers an external impulse slightly lower than that estimated in March, due to less favorable financial conditions and lower terms of trade associated to the oil price hike. Activity and inflation data of recent months have consolidated the differences between the cyclical position of the United States and the other developed economies.

While financial markets have improved significantly, real estate problems, bank closures, and significant non-performing loans on the books of many banks continue to provide financial headwinds to the recovery. And clearly – as the headlines of the past week have highlighted – financial problems abroad still have the potential to result in slower U.S. exports, and may hold potential further problems for global financial institutions. In sum, my view is that with inflation expectations stable, core PCE inflation rates declining, and significant excess capacity in the economy, accommodative monetary policy remains appropriate. Thank you. 6  See for example the remarks by Chairman Ben Bernanke at the National Commission on Fiscal Responsibility and Reform on April 27, available at http://www.federalreserve.gov/newsevents/speech/bernanke20100427a.htm. BIS Review 62/2010  5
As recent as in January 2012, Paul Krugman said in an interview for Le Monde that “inflation is not the problem, but the solution”. Likewise, my advisor on monetary policy issues is of the opinion that Minsky’s Financial Instability Hypothesis teaches the lesson that when a credit-fuelled bubble bursts, it is better  BIS central bankers’ speeches  11  if inflation is high in order to support balance sheets. He proposes to enhance the monetary policy objective from “low and stable inflation” to “moderate and stable inflation” (Croitoru, 2012). Although I am not opposed to the aforementioned judgments and to the idea of moderate and stable inflation, I believe that “moderate inflation” should be clearly defined. However, I am afraid that, from this point on, my views depart from the theories of moderate inflation, because, in my opinion, “moderate” as it might be, inflation needs to be low enough in order not to trigger adverse consequences such as disanchoring inflation expectations and the emergence of a wage-inflation spiral, in which widespread wage indexation magnifies the impact of inflationary shocks and hampers monetary policy effectiveness. Experience has taught me that inflation is an insidious disease and should not be toyed with. As a matter of fact, one of the first pieces of advice I received as Governor from experienced central bankers was that for a Governor there is no such thing as too low inflation and too high foreign exchange reserves. 7.

But macroprudential measures need to be resorted to with a certain degree of precaution as well, since they may actually foster capital inflows and thus run counter to macroeconomic policies. Potential output declined severely in the aftermath of the crisis. A possible resumption in capital inflows would take aggregate demand higher and hence generate an inflationary production gap. Emerging countries would resort to fewer forex market interventions, allowing their currencies to appreciate in order to contain inflation. However, the long-term financial stability gains derived from macroprudential measures entail further capital inflows. The tolerance for currency appreciation (fewer interventions) may be reversed in light of the larger capital inflows. Moreover, a stronger currency may foster further inflows of portfolio investment. This goes to prove that not all measures trying to fend off capital flows are necessarily successful in reducing the incentives for capital inflows. Let me conclude by saying that the available measures to address large capital inflows are not safe from side effects. The policy mix needs to be conceived so as to maximize the benefits of capital inflows while insulating against related risks (Zhu, 2011). In a world where sustainable economic growth hinges on free markets, capital controls should only be considered as a measure of last resort, if at all. Prudential measures should be designed to minimize the distortions they trigger and should be resorted to only after all macroeconomic options have been exhausted. 6  BIS central bankers’ speeches  4. Foreign-owned banks – asset or liability?
Their breadth indicates that it is not particularly meaningful to focus on tenths of percentage points in inflation. But the uncertainty bands also show that there is a large probability that inflation will remain within the tolerance interval of 1-3 per cent over the coming years. It is also worth reminding that inflation seen over a longer period of time has not on average deviated significantly from the target. In our current assessment the rate of wage increase is particularly uncertain. On the one hand, the fact that many agreements in the labour market will be renegotiated in a favourable labour market situation entails a risk that wages will increase more than we had assumed in our main scenario. On the other hand, it is also possible that we are underestimating how much the labour supply may increase. This means there is also a downside risk for wages. As before, we cannot ignore that there are risks linked to the rapid increase in house prices and loans. Imbalances could build up. When imbalances sooner or later have to be corrected, this can lead to undesirable fluctuations in inflation and the real economy. At our most recent monetary policy meeting we weighed these risks and considerations against one another. This resulted in the assessment that the repo rate needed to be raised by a further 0.25 percentage points and that it would then need to be raised once more over the coming six months.

I must hasten to mention however that in striving to increase credit, banks must always comply with the regulations as stipulated in the Banking & Financial Services Act to ensure the safety of customers’ deposits. Furthermore, much more credit needs to be directed to sustainable productive sectors like Agriculture, Manufacturing and Tourism. This entails increasing borrowing options available to the small scale farmers and the SME sector. At current levels, interest rates are too high for the SMEs to access credit and venture into meaningful projects. In order to reduce the incidences of default, the Bank of Zambia has through NB Circular 3/2008 of December, 2008 made it mandatory for every lender in Zambia to go through the Credit Reference Bureau. Any loans approved without passing through the Credit Reference  BIS Review 4/2009  1  Bureau will attract Regulatory Action. This will undoubtedly help to reduce the cost of borrowing. I therefore, urge banks and other financial institutions to continue reviewing the cost of borrowing as part of the process to improve SMEs access to the much needed finances to expand their operations, employ more people, and thereby provide impetus to significantly reduce poverty rates in the country. It is also my hope that the coming on board of the Citizens Economic Empowerment Commission will significantly aid the development of the SME sector. Hon Minister, Distinguished ladies and Gentlemen, As a direct consequence of being an open economy, Zambia has not been spared by the effects of the current global financial turmoil.
In my view, the large gap between the current unemployment rate and the long-run NAIRU suggests there is little payoff from investing much energy to more precisely estimate the NAIRU. As the economy expands and the unemployment rate falls, we will have plenty of time to be able to refine our estimates of NAIRU in light of what happens to labor cost trends such as the employment cost index, and to unit labor costs. Currently, all these measures are quiescent and consistent with a large amount of labor market slack (Chart 24). The second question is whether the economy could grow so fast that inflation pressures could rise even with an unemployment rate still well above the NAIRU. The notion is that at very fast growth rates wages and prices might have to rise in order to funnel labor and capital to those areas where demand and output were rising particularly rapidly. Although this possibility shouldn’t be ruled out, we should not be too worried about this, particularly if growth is broadly based. In particular, the economy is not growing quickly right now relative to past recoveries. For example, in the rebound from the comparably deep early 1980s recession, the annualized growth rate exceeded 7 percent for five consecutive quarters. Moreover, empirically there is little historical evidence that discontinuous “speed limit” effects play a significant role in influencing inflation in the United States.

But, as it showed just recently in making a modest reduction in interest rates, the ECB is sensitive to changes in the balance of risks around those judgements. So, too, are we in the United Kingdom. In our case we have been fortunate, since being driven out of the ERM in 1992 and moving to a symmetrical inflation target, in enjoying a sustained period of relatively stable economic growth. In fact we've experienced the longest period of continuous quarter by quarter growth since quarterly records began, with average annual growth at around 3% over the whole period compared with our long term trend rate of 2¼-2½%. Employment has steadily increased, and unemployment has fallen to its lowest level for 25 years. Meanwhile the rate of inflation has been consistently relatively close either side of the Government's 2½% target – the lowest and most stable rate of inflation that most of us in this country can remember. Domestic demand growth in the UK has remained relatively robust into this year, but we too are affected by the US slowdown and by the associated weakening of equity prices. And we have had a new problem of our own in the form of Foot and Mouth Disease, the effects of which have gone a good deal wider than just the agricultural sector. These new developments were likely to have a dampening effect on overall demand pressure within the economy, both through their direct impact and through possible damaging effects on confidence.
At the same time, we continue to expect euro area economic activity to benefit from ongoing growth in the global economy as well as from the accommodative monetary policy stance and the various measures taken to support the functioning of the financial sector. This assessment is also reflected in the September 2011 ECB staff macroeconomic projections for the euro area, which foresee annual real GDP growth in a range between 1.4% and 1.8% in 2011 and between 0.4% and 2.2% in 2012. Compared with the June 2011 Eurosystem staff macroeconomic projections, the ranges for real GDP growth in 2011 and 2012 have been revised downwards. In the Governing Council’s assessment, the risks to the economic outlook for the euro area are on the downside, in an environment of particularly high uncertainty. Downside risks  BIS central bankers’ speeches  1  mainly relate to the ongoing tensions in some segments of the financial markets in the euro area and at the global level, as well as to the potential for these pressures to spill over into the euro area real economy. They also relate to further increases in energy prices, protectionist pressures and the possibility of a disorderly correction of global imbalances. With regard to price developments, euro area annual HICP inflation was 2.5% in August 2011, according to Eurostat’s flash estimate, unchanged from July. We have now seen inflation rates at relatively high levels since the end of last year, with higher energy and other commodity prices as the main drivers.

Looking beyond the monthly data and the effects of special factors, trends in broad money and loan growth have broadly stabilised over recent months. Overall, the underlying pace of monetary expansion remains moderate. At the same time, monetary liquidity accumulated prior to the period of financial market tensions continues to be ample. Looking at M3 components, the annual growth rate of M1 decreased to 0.9% in July, whereas growth in other short-term deposits remained unchanged at 3.7%. These developments continue to partly reflect the gradual increase in the remuneration of shortterm time and savings deposits over recent months. On the counterpart side, the annual growth of loans to non-financial corporations continued to edge up slightly, from 1.5% in June to 1.6% in July, whereas the annual growth of loans to households seems to have levelled off at around 3%. The overall size of MFI balance sheets has remained broadly unchanged over recent months. Where it is necessary to provide adequate scope to expand the provision of credit to the private sector, it is essential for banks to retain earnings, to turn to the market to strengthen further their capital bases or to take full advantage of government support measures for recapitalisation, in line with the findings of the recent stress tests. To sum up, based on its regular economic and monetary analyses, the Governing Council decided to keep the key ECB interest rates unchanged. Inflation has remained elevated and is likely to stay above 2% over the months ahead before declining next year.
Another perspective on the risks around debt is pricing – whether investors have taken all risks into account, and priced them prudently or whether there’s a degree of optimism that is reflected in the pricing (just as optimism can be a factor in rising debt levels). Pricing for much of the stock of global debt is not easily visible, but for debt traded in markets – typically corporate bonds – we can observe the following. Spreads – the amount charged for risk, be that credit risk or liquidity risk – are low by historical standards at the moment. The relatively low compensation demanded for risk can also be seen in the small difference between the price of investment grade and high yield bonds. We can observe some of these trends in non-traded debt. Spreads on leveraged loans are roughly 100bps lower than they were in 2015 for the US, which comprises most of the global market, and 70 bps lower in the UK. Alongside this low pricing for risk, volatility is low. The VIX ended April at about 13 – well below its 21st century average of about 20. And US equities are similarly priced – implying investors are demanding a low equity risk premium. Moreover, risk-free rates are low in many jurisdictions, and yield curves are broadly flat in all major jurisdictions. This suggests there is little market expectation of any pickup in growth or, perhaps more notably, inflation. Similar conditions have persisted for much of the last few years.

We  BIS Review 68/2004  1  believe that improving risk management helps to increase the stability of the global financial system - a goal that would benefit not just banks, but more broadly businesses and consumers. To foster greater financial stability, the Basel Committee blended several policy approaches to replace the existing capital framework. Basel II consists of three mutually reinforcing pillars. The first pillar aligns the minimum capital requirements more closely to banks’ actual underlying risks. Many banks will rely on external measures of those risks to determine their capital requirements. These might include drawing on credit ratings issued by external rating agencies or on supervisors’ assessments of the degree of operational risk inherent in various businesses. More sophisticated institutions, in comparison, may qualify to rely partly on their own measures of those risks when determining their capital requirements, an innovation that will help to create economic incentives for banks to improve those measures. The second pillar - supervisory review - allows supervisors to evaluate each bank’s assessments of its own risks and to determine whether those assessments seem reasonable. Ultimately each bank’s own management is responsible for assessing and responding prudently to all of the risks that a bank faces, including those risks that might not be captured entirely in the first pillar. The second pillar will therefore foster a dialogue between banks and their supervisors on the nature of the risks that banks face and the measures they take to control them, including holding aside sufficient levels of capital.
First, the earnings that Federal Reserve returns to the U.S. Treasury Department each year are likely to fall in the future, as rising short-term interest rates narrow the gap between what the Federal Reserve pays on its liabilities—primarily currency and bank reserves—and what it earns on its portfolio of Treasuries and agency mortgage-backed securities. In recent years, the Federal Reserve’s remittances to the Treasury have averaged about $ billion per year, far above the $ billion average prior to the Great Recession. Although the precise trajectory of future reimbursements is highly uncertain, the Congressional Budget Office (CBO) projects that Federal Reserve payments to the Treasury will drop from around 0.6 percent of GDP in fiscal 2016 to 0.3 percent of GDP by 2026. Second, the Treasury’s debt-service costs will likely grow as interest rates rise and the amount of outstanding debt held by the public continues to increase. While net outstanding Treasury debt held by the public has risen to $ trillion from $ trillion over the past decade, annual debt-service costs have only increased very modestly. Looking ahead, the CBO’s baseline projection is that debt-service costs will rise from 1.4 percent of GDP in fiscal 2016 to 2.6 percent of GDP in 2026. Third, the retirement of the baby boom generation will put significant upward pressure on Social Security and Medicare expenditures.

Charles Bean: The economic outlook Speech by Mr Charles Bean, Deputy Governor for Monetary Policy of the Bank of England, to the Northern Ireland Chamber of Commerce, Belfast, 19 May 2011. *  *  *  Good afternoon! It is a great pleasure to be back again in Belfast. I am particularly pleased to be addressing you in this historic venue, whose grandeur bears witness to Belfast’s long history as a key hub for international trade. That is symbolised in the stained glass windows on the ground floor, which show Neptune, the god of the sea, flanked by images representing the industries synonymous with Victorian Belfast: Navigation; Spinning; Weaving; and Engineering. The local economy has changed considerably since those days. And change will be a theme that runs through my talk today. It is now 18 months since the economy began to recover from the worst fall in output in the post-war period. Since its trough in 2009 Q3, estimated GDP has risen 2½%, leaving it some 4% below its peak prior to the financial crisis. But towards the end of last year the pace of recovery appears to have slackened. Excluding the effects of the snow, which the ONS say reduced output by about ½ percentage point in the fourth quarter, activity was reported to have been broadly flat across the final quarter of last year and the first quarter of this one; see Chart 1.
Over the past year, developments in financial markets have been largely dominated by several political events, while generally positive economic news seemed to matter much less. These political events ranged from trade tensions, especially between the US and China, to Brexit-related developments, a slowdown in emerging market economies, most notably in Argentina and Turkey, and also the rise of populist movements in some European countries that have led to tensions, particularly between Italy and the European Commission. All this led to volatility in financial markets, with a constant turn in Risk-On /Risk-Off sentiment, which has made it more challenging for investment strategies. As a Central Bank, financial market developments are of a direct interest to us as these have an impact on both the domestic banking system and the Central Bank itself. While such volatility in financial markets and persistence of interest rates at a relatively low level in Europe have continued to exert pressure on interest income flows and potential on capital gains, and hence impinge on profitability, nevertheless domestic banks have absorbed such turbulence relatively well. For the  Page | 3  year ahead, the situation is likely to remain equally challenging on interest income and profitability, as signs are emerging that world economic growth, including in Europe, is losing momentum. This could be also particularly challenging for the process of the normalization of the monetary policy stance in Europe, which is likely to be very gradual.

The Government’s efforts need to be complemented with a better utilisation of savings accumulated by the private sector. The Malta Development Bank can help in this regard, by identifying gaps in the financing of viable projects and partnering with financial intermediaries and other stakeholders to develop financial instruments that can finance them. Apart from infrastructure bottlenecks, international institutions that monitor the business environment flag other areas that warrant immediate attention. While we have significant  reservations on a number of methodological aspects underlying such surveys, we also share the view that in some areas we do need to step up our efforts very considerably. This is notably the case as regards the efficiency of court proceedings. Although the time it takes to resolve court cases has more or less halved since 2010, it is still among the longest in the European Union. Other challenges we need to address concern the length of procedures to set up a business, the low educational attainment level relative to our peers and a limited capacity to innovate. These are essential elements that support investment and productivity. The development of an intelligent online business portal which ties all Government business-related services into a one solid platform should put businesses in a better position to do business. The new legislation in the area of digital innovation provides the legal framework for business to embrace disruptive technologies.