samchain/econo-pairs-v1 huggingface dataset:
The forecast for underlying inflation, measured as UND1X, is 1.9 per cent one year ahead and 2.0 per cent two years ahead. However, the uncertainty in the inflation forecast has increased recently for several reasons. Between 2000 and 2001 GDP growth was subdued from 3.5 to 1.2 per cent, at the same time as inflation rose from 1.4 to 2.7 per cent on an annual average. One possible explanation for this unexpected development is that the production capacity of the economy increased at a slower rate last year. The production gap, which comprises the difference between actual and potential production, plays an important role in the Riksbank’s assessment of inflation. The basic idea is that if the total demand in the economy exceeds the production capacity, it creates price pressure in the economy that can lead to inflation. Potential growth is thus the production level compatible with price stability. Production capacity depends on factors such as labour supply, production technology, capital stock, as well as institutions and regulatory frameworks that affect the way the economy functions. These factors also affect the development of demand in the economy. The fact that a gap can arise between the actual and potential production could be due to prices and production factors being slow moving and to the fact that it takes time before production and demand have adapted to a change. As the economy is affected by different types of disturbances, the potential production capacity and the level of production vary over time.

As inflationary pressure can vary according to demand and changes in the level of resource utilisation, the events caused the Riksbank and other central banks to decide to lower their instrumental rates shortly after the attacks. Now that almost exactly nine months have passed, we can conclude that the impact on the global economy was less than feared, although some sectors, such as the airline industry, were hard hit. Furthermore, we are seeing increasing signs that economic activity is improving both in the USA and Europe. One factor that often contributes to turnarounds in economic activity is companies’ stockbuilding. When stocks are well-filled and sales decline, companies cut back on production so that it becomes even lower than demand. This destocking then pushes economic activity down to begin with. When the cutback in stocks gradually reaches an end, companies can increase production again without waiting for demand to increase. This gives increased strength to the upturn in activity. It is probable that this is the case right now; according to several indicators production has begun to increase and a certain amount of optimism is beginning to spread. The total economic policy is expansionary in many countries, which provides additional fuel to the sequence of events. The economic situation in the USA and Europe This means that demand on Sweden’s most important export markets is increasing. The turnaround has been particularly noticeable in the USA. There, both residential construction and household demand have been upheld during the economic slowdown by stimulation policy.
Fiscal policy, too, has played a very big part, helping to spread the cost of this large shock over time, because otherwise the cost to the public and the country would be unbearable. When I step back from all of this, I think the strong logic is that we are using the tools of counter-cyclical policy, consistent with the remit in the Bank’s case, to support the economy as best as possible through this unprecedented shock. But I sometimes hear that the Bank has flouted the rules and thereby damaged its independence, by purchasing government debt and lowering the government’s cost of borrowing. In many ways, I am glad that central bank independence is being vigilantly scrutinised. This is an important aspect of the Bank’s public accountability. But I’m sorry to have to be blunt, I’m afraid these arguments are entirely without merit. In a world where the Government has to manage the task of spreading the cost of the pandemic which would otherwise fall on individuals at great cost to them, and the central bank is acting counter-cyclically to support demand in the economy consistent with its inflation target, it is hardly surprising, and indeed consistent, that the Government should be able to benefit from those financing conditions. If the situation was otherwise, and the central bank acted to prevent counter-cyclical policy taking effect, we would be abandoning the remit on which our operational independence is based. Put another way, to be independent does not mean to be disorganised.

Both monetary and fiscal policy are inherently counter-cyclical, and arguably never more so than when we face a shock of the scale of a global pandemic. But at the core of the argument for central bank independence is the evidence from the past that without an independent institution operating monetary policy the overall effects of economic policy were dangerously pro-cyclical at times, leading to bad outcomes. In the face of what may be the deepest recession since 1709, with a collapse of economic activity alongside very low inflation, the question we ask ourselves is what should an inflation targeting central bank do in this situation? The lessons of history don’t change. The answer is to respect our remit and our target, no good will come of ignoring that. The logic of counter-cyclical policy is that all the tools should be applied to raise activity and support employment and the welfare of the public, all of which is consistent with an inflation targeting monetary policy. In practice, doing so has meant using tools to keep financial conditions sufficiently accommodative to offset as best we can such a large shock. This has been essential to support the flow of credit to businesses, which has been very substantial, and has called on both the monetary policy and financial stability tools of the Bank of England. This has also helped to lessen any longer term economic damage from the pandemic, resulting from longer term unemployment and business failures.
The direct effects of these factors on inflation are exhausted after a year. Hence these factors do not have any implications for the interest rate, which is normally set with a view to maintaining inflation at 2½ per cent two years ahead. However, it is still interesting to adjust monthly inflation figures for temporary effects to determine whether developments are broadly in line with our projections. This is why Norges Bank presents figures for consumer price inflation where the effects of some temporary factors are excluded. However, the automatic adjustment of inflation figures for direct effects of one-off factors can also be associated with pitfalls. Higher indirect taxes and electricity prices can be a source of accelerating inflation via spillover effects on other prices and wages. BIS Review 47/2001  3  The mandate for monetary policy with an inflation target provides a sound basis for assessing Norges Bank's interest rate setting. Inflation at one point in time, adjusted for certain temporary effects, provides a measure of whether interest rate setting was appropriate. Market participants and others can assess the quality in the inflation reports and analyses published by the Bank, and whether our analyses are consistent with our interest rate setting. The uncertainty associated with economic developments and inflation, as observed since the mid-1990s, may indicate that we normally reach the inflation target within an interval of +/- 1 percentage point. The Government has assigned a task to Norges Bank. Norges Bank uses its professional judgement in a delimited area.

Zamani Abdul Ghani: The SME sector in Malaysia Speech by Mr Zamani Abdul Ghani, Deputy Governor of the Central Bank of Malaysia, at the Signing of Strategic Alliance Agreement between Credit Guarantee Corporation Malaysia Berhad (CGC) and Dun and Bradstreet (D&B) Malaysia Sdn Bhd, Kuala Lumpur, 3 July 2007. *  *  *  Yang Berbahagia Datuk Wan Azhar Wan Ahmad Chief Executive Officer Credit Guarantee Corporation Malaysia Berhad Mr. William Lim Wah Liang Group Executive Director Dun & Bradstreet (D&B) Malaysia and Singapore Distinguished guests, Members of the media, Ladies and Gentlemen, Assalammualaikum w.b.t. and Good Morning It gives me great pleasure to be here with you this morning to officiate and witness yet another milestone of progress for the Credit Guarantee Corporation Malaysia Berhad. I would also like to take this opportunity to thank both CGC and Dun & Bradstreet Malaysia Sdn. Bhd. for the invitation to be a part of this significant occasion. The forging of this strategic alliance between CGC and D&B is indeed timely. In the long run, we believe this initiative would bring much benefit to the financial sector and contribute greatly towards the development of the SME sector, especially in enhancing SMEs' access to financing as well as market penetration and awareness on the importance of SMEs. The SME sector has been and shall remain one of the key drivers of the nation's economic growth.
49  See Bernanke (2,016). 50 See Greenwood et al. (2016). 20 [35]  there is a large supply of central bank reserves, then the supply of short, liquid and safe assets for the banks increases, which can help to stabilise the financial markets and ensure the payment system functions in a crisis situation. 51 A general conclusion of this review is that the conditions on the financial markets have changed, and that the Riksbank and other central banks need to adapt their measures to these changes. There are thus several economic reasons for making asset purchases and a large balance sheet a part of this adaptation. Are government bond purchases monetary financing? The Riksbank can thus purchase government bonds for monetary policy purposes. However, the purchases may not entail ‘monetary financing’ of public finances, that is, state expenditure may not be financed by banknote printing. But defining what this means in practice is not a simple matter, and it is not so strange that there is sometimes confusion regarding this concept. 52 Let me give an example. A normal monetary policy transaction involves the Riksbank buying a particular amount of government bonds with new central bank reserves. Could this be regarded as monetary financing? To some extent, one might say that it could. The Riksbank has in fact financed some of the state’s expenditure with “newly printed” money.

After the upgrading of the physical infrastructure during the past two decades, recent reforms have included the restructuring of the public and public-enterprise sectors, a wide-ranging privatization programme, port reform and the first stage of a pension reform, and the full liberalisation of the trade and capital accounts. As a result, the public sector’s profile in both product and resource markets has been reduced, and the price mechanism now has an increased role in the allocation of resources. At the same time, and this is arguably the most impressive development, the fiscal deficit has been reduced to a quarter of its size in 2003. Looking beyond the introduction of the euro, therefore, the task is to maximize the benefits of participation in monetary union by making further progress on the path of reform. The National Reform Programme provides a good basis for this purpose, as do the recent reports by the Commission, the ECB and the IMF. A common conclusion of these reports, and one which is shared by the Central Bank of Malta, is that further fiscal consolidation is necessary in order to achieve a balanced budget by the set date. In this regard, there needs to be a greater emphasis on expenditure-based adjustment, particularly in view of rising pressures caused by ageing-related factors such as pension and health care costs.
In a sense it is also much too early even to think about this question, given that the terms of the UK’s exit from the EU, and its future relationship with it, are still far from clear. And this will of course be a question for the Government and Parliament to settle when the time comes. However, in its own way Britain can be pretty stylish so I and colleagues at the Bank have been spending a little time thinking about this issue, in order to be ready to offer views when the time comes. We have begun, of course, with first principles. As I am a practical person I always approach first principles with a degree of caution, but nonetheless in principle at least it must be good to have principles. So here are a few, which I would argue should form the basis of any regulatory regime which aims to deliver safety and soundness and financial stability in a UK context: 2  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  2  1. Robust prudential standards. This one may be in the category of “so obvious why do you need to say it?” But I think it’s vital that this is stated as the first and most important feature of any credible framework for prudential regulation. The goal is to ensure continuity in the supply of vital financial services to the real economy throughout the cycle, including after severe shocks. All other principles should be subordinate to this one. 2.

Surely many of us would find it intensely irritating to go back to needing a laptop to check our bank balance rather than doing it through the app on our phones, or indeed – if we jump another generation back – to have to go into a branch to arrange a payment, although branches are still very important for many 3  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  3  customers. Regulation should not block these advances, and should actively keep pace with them – for instance we need to have the ability to adapt the calibration of liquidity regulations if it turns out that app-based deposit outflows have a different shape from branch-based ones. And as new players emerge we need to make sure that our regulation is not creating unnecessary barriers to entry and thereby impeding healthy competition. But sometimes the system adapts for bad reasons – the profit motive drives firms to find the weaker parts of the system and channel business into them. We need to be sufficiently fleet of foot to respond to these shifts before they create serious problems – in short, regulation should be future-facing and keep fit for purpose. 5. Consistency. Firms and the public need to be confident that the regulatory framework is stable, that prudential rules are based on clear evidence, and that supervisory judgements are impartial and consistent.
But it is not inconceivable that we might break that record, as the Bank’s forecast, published yesterday, entails that inflation will remain below target through the early months of 2015. Inflation below target is not more desirable than inflation above target, though. In this context, we mustn’t fall into the trap of expecting monetary policy instruments to be so strong and quick-acting that inflation will always measure 2.5%, no matter what shocks hit the economy. The main objective is to keep average inflation close enough to the target over a long period of time that the target itself provides an anchor for inflation expectations and the many decisions that require an estimate of future inflation. But how close is close enough? In this context, our so-called tolerance limits for the inflation target – namely, 1% and 4% – are too wide, and it is worth noting that those limits are merely the trigger for the submittal of a report to the Government explaining how inflation will be  BIS central bankers’ speeches  1  brought back to target. In short, then, the inflation target is not 1–4%. In order to underline the control problem, I sometimes say that the inflation target is not 2.5% but 2½%. What this means is that, if we think in whole and half percentage points, a deviation of half a percentage point or less from target would be considered within the boundaries of targetlevel inflation.

In this respect, the BNR opinion has been repeatedly expressed in public, namely that such a correction can only be made via a balanced mix of monetary, fiscal and income policies, coupled with faster structural reforms that would lead to higher productivity. What would be the effects of a downgrade for Romania? Let me stress this again, I do not believe in a downgrade. As I have already mentioned, we may see a change in the outlook. If there is a downgrade, its consequences would be rather serious. It would primarily be reflected by the marked increase in external financing costs, but also by deterring FDIs, which would limit the country's rapid growth potential. Why do you think rating agencies are more cautious about Romania than about other countries? It may be because of an insufficient clarity regarding the real economic and financial situation of Romania, which may derive also from the inconsistent signals that sometimes come from inside the country. Thank you very much, Mr. Governor. BIS Review 113/2008  3
These projections continue to be contingent on meeting the assumptions for the recovery of the economy as the main prerequisite for the growth of the deposit potential, for forming positive expectations of banks and for greater propensity of the private sector to borrow. In this context, the dynamics of “bad loans” is of particular importance. Comparatively speaking, although their share in the total portfolio is moderate, there is room for improvement in this area, especially in the corporate sector segment. Given the fact that until recently, the granting of loans was concentrated with households, the new credit flows need to be more balanced between the sectors, which implies gradual resolution of the problems with non-performing loans to the corporate sector. The application of the new regulations – the new Basel standards, may also be a medium-term challenge for the banking system. Although the main growth projection for the Macedonian economy suggests relatively dynamic growth during 2015 and 2016, there are risks related to this scenario, mainly arising from the external environment. They are mostly in a downward direction, and it was assessed that they further increased this year. It is assessed that the increase in the short-term risks is a consequence of the growth of geopolitical tensions in the countries of the Middle East and the tensions between Russia on the one hand, and Ukraine and West-European countries on the other.

Since 2010, the cumulative positive effect of these companies on the trade balance is about Euro 200 million, or 2.6% of GDP. This reduces the external vulnerability and improves the risk profile of the country and its foundations. The raised technological level, the increase in manpower, the improved access to capital, the spillover effects on domestic companies (which is already visible in our country), the absorption of the workforce, are also significant favorable effects. In the medium term more positive effects should be expected. The second key factor that significantly contributes to achieving solid rates of economic growth is the fiscal stimulus, through the increased number of investments in infrastructure projects. Large investments in road, rail and energy infrastructure are, on the one hand, an important impetus for growth in the short run, while on the other, they improve the competitiveness of the economy and contribute to the increase in the potential growth. The public sector share in the investments during the crisis has increased (from 20% in 2007 to 34% in 2010), offsetting the smaller investments from the private sector and providing positive stimulus for the economy. It is expected that Government’s announcements of infrastructure projects will continue to provide significant support for the growth in the medium term. What is also important is that the growth in recent years has created preconditions for improving the conditions in the labor market.
One of the main motivations for this rapid research effort is the swiftly decreasing use of cash. Just some two per cent of the money supply is now created directly by the central bank in Sweden, for instance. But even the avant-garde Swedes consider the e-krona a complement of cash, not a fully-fledged substitute. The potential advantages of distributed ledger technology and central bank digital currency are the following: more efficient payment systems, direct and more efficient conduct of monetary policy (perhaps even practically enabling helicopter drop of money) and, if implemented on a sufficiently large scale, an end to the need to run costly deposit insurance schemes. But will central bank digital currency become a complete alternative to cash one day? I’m not sure. Many questions remain: anonymity, susceptibility to cybercrime and IT issues. But above all those, a key issue arises: the problem of competition. Will the central bank change into a direct competitor to commercial banks? Will it serve as a “bank of last resort” for all deposits in bad times? Should it also provide credit to the real economy? Might it become a real monobank, like the ones we saw a few decades ago in former socialist countries? What would the entire money-creation process look like? These questions are too important to rush around. So far it seems to me like social engineering to talk about abolishing cash fully and issuing digital currency instead.

So does the responsibility for breaking off talks lie entirely with Greece? The decision to interrupt discussions was taken by the Greek authorities. That also surprised us, for we were coming to the end of some quite focused and fruitful exchanges. You are talking about proposals in the past tense. Does the ECB consider that the question to be put to the Greeks in the referendum is already null and void, since the assistance arrangement will no longer be relevant from the evening of 30 June? The programme will indeed formally expire on Tuesday evening. Having said that, if the response is “yes” I have no doubt that the euro area authorities will find the means, one way or another, to honour the commitments that have been made. The question is a political one. It’s the Greeks who hold the answer to that question. And if the Greeks say “no”… That would be to refuse the offer made by the other 18 members of the euro area. It would then be very difficult to revive the political dialogue. The Eurogroup clearly considered that the proposals of the three institutions had reached the limits of what was acceptable. Alexis Tsipras feels that Europe has not lived up to its commitments on debt restructuring… The debt question was indeed a priority for the Greek government.