Bank of France

Philip R. Lane: The economic outlook and monetary policy

Retrieved on:

Wednesday, April 3, 2024

Key Points:

Debate on: Is the inflation surge over and what are the lessons for monetary policy?

Retrieved on:

Wednesday, April 3, 2024

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Shocks to the shortages variable are constructed as deviations in the values from the sample mean.

Key Points:

Shocks to the shortages variable are constructed as deviations in the values from the sample mean.
Shocks to the vacancy-to-unemployment ratio (labour market variable) are constructed
as the actual value minus the value in the fourth quarter of 2019.
?Indirect impact of energy prices on non-energy inflation? is the sum of the indirect effects of oil,
gas and electricity prices.
3
Historical
Rubric comparison of inflation episodes in the euro area ? headline and core
Headline

Core

(percentage points)

(percentage points)
Current euro area episode
Past global episodes

Current euro area episode
Past global episodes
2

2

0

0

-2
-4

-2

-6
-8

-4

-10
-12

-24

-18

-12

-6

0

6

12

18

-6

24

Months around inflation peak

-24

-18

-12
-6
0
6
12
Months around inflation peak

18

Sources: BIS, Eurostat and ECB calculations.
The dark blue line represents the latest developments in headline and core inflation for the euro area, relative to the October
2022 peak.
Non-energy industrial goods inflation refers to a panel of all euro area countries, while services inflation refers to
a panel of 30 AEs and 28 EMEs.
Month = 0 is when the headline inflation value is at the highest during that particular episode.
The dark blue line represents the latest developments
in non-energy industrial goods and services inflation for the euro area, relative to the October 2022 peak.
unprocessed
food and energy
HICPX

8
3.0

3.0

2.5

2.5

2.0

2.0
1.5

1.5
1.0
Feb-24

Jul-24

1.0
Dec-24 Feb-24

Jul-24

8

7

7

6

6

5

5

4

4

3

3

2

2

1

1

Adjusted
measures

Difference
4

3

2

1

0
0
0
Feb-24 Jan-23 Jul-23 Jan-24
Jan-23 Jul-23 Jan-24
Feb-24 Jan-23 Jul-23 Jan-24
Feb-24

Dec-24

Sources: Eurostat, March 2024 ECB staff short-term inflation outlook, Consensus
Economics, Bloomberg and ECB calculations.
The ?adjusted?
measures abstract from energy and supply-bottleneck shocks using a large SVAR, see
Ba?bura, Bobeica and Mart?nez-Hern?ndez (2023), ?What drives core inflation?
Notes: 5-days moving average risk-neutral
probabilities of inflation implied by five-year and tenyear zero-coupon inflation options.
16
8

12
Quarters

16

20

Policy
Rubriccounterfactuals
Interest rate under alternative
counterfactuals

Counterfactual impacts on
Inflation

(percentages per annum)

(annual percentage change)

Baseline
Earlier and longer
Earlier, longer and higher

8

Baseline

7
6
5
4
3
2
1
0
-1
2021Q4

2022Q4

2023Q4

2024Q4

Earlier, longer and higher

10

2

8

0

6

-2

4

-4

2

-6

0

-8

-2

2025Q4

Earlier and longer

Output gap

(p.p.
The RHS chart displays the impact on inflation (first panel) and output gap (second panel) for each of the hypothetical alternative paths of the interest
rate.
As a caveat, financial feedback loops as well as feedback loops between inflation expectations and inflation are not activated.

Gas price shocks and euro area inflation

Retrieved on:

Tuesday, February 13, 2024

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We document

Key Points:

We document
how gas price fluctuations have a heterogeneous pass-through to euro area prices
depending on the underlying shock driving them.
How do gas price shocks feed through to euro area
inflation, and is the pass-through shock-dependent?
We analyse the importance of gas price shocks
for euro area inflation in two steps.
We identify three structural shocks driving European gas prices,
inspired by the literature on oil but tailored to the European gas market: (i) a gas supply
shock, which reduces the supply of natural gas to the European market, increases the
gas price and lowers gas inventories; (ii) an economic activity shock, which lifts demand
for gas due to higher economic production, and finally (iii) a shock to gas inventories,
when gas prices are driven by precautionary demand by gas companies.
First, all three identified shocks are
important drivers of gas price dynamics, but they differ in how persistently they push
ECB Working Paper Series No 2905

2

up gas prices.
The effect on euro area HICP of a shock to gas supply is more
persistent and somewhat higher than when gas prices are driven by economic activity
shocks.
A final key finding is that the pass-through of gas market shocks to euro area inflation
appears non-linear.
The unprecedented volatility of gas prices
contributed to the inflation problem in the euro area, with the gas price shocks feeding
through producer prices, wages and persistently lifting core inflation.
More expensive
energy contributed substantially to the rise in inflation in Europe during 2022.2
Figure 1: Gas price and euro area Harmonized Index of Consumer Prices.
How do gas price shocks feed through to euro area
inflation, and is the pass-through shock-dependent?
For instance, about 75% of gas imports to the euro area arrives
through pipelines, making gas imports difficult to substitute and gas markets subject to
3
See for example the evidence by Rubaszek and Uddin (2020) for the US economy.
We analyse the importance of gas price shocks for
euro area inflation in two steps.
We identify three structural shocks driving European gas prices,
inspired by the literature on oil but tailored to the European gas market: (i) a gas supply
shock, which reduces the supply of natural gas to the European market, increases the
gas price and lowers gas inventories; (ii) an economic activity shock, which lifts demand
for gas due to higher economic production, and finally (iii) a shock to gas inventories,
when gas prices are driven by precautionary demand by gas companies.
First, all three identified shocks are
important drivers of gas price dynamics, but they differ in how persistently they push
up gas prices.
But when gas prices are driven by
inventory demand shocks, the price effect typically dies out within one quarter.
A final key finding is that the pass-through of gas market shocks to euro area inflation appears non-linear.
The unprecedented volatility of gas prices
contributed to the inflation problem in the euro area, with the gas price shocks feeding
through producer prices, wages and persistently lifting core inflation.
(2022) and Alessandri and Gazzani (2023) identify gas supply shocks using VAR models,
finding that gas price shocks lead to persistent increases in headline inflation.14 Ba?bura
et al.
(2023) find positive effects of gas price shocks on core inflation in a BVAR for
the euro area that includes one type of gas shock along a longer list of macroeconomic
shocks.
3.1
Data

For the gas market BVAR model, we use gas quantities, gas prices, gas inventories and
euro area industrial production, as displayed in Figure 2.
(2015) to optimize
ECB Working Paper Series No 2905

13

the posterior distribution.16 The vector Y includes the European gas quantity proxy, gas
inventories, the European gas price benchmark and euro area industrial production.
As demand for gas increases, the gas price also rises
while inventories fall as agents use gas in storage to partially satisfy higher demand.
Shocks to gas
quantities driven by gas supply or inventory shocks tend to revert to pre-shock levels after
around five to seven months, while economic activity shocks lead to a more long-lived
increase in gas demand.19 Dynamics in gas inventories are more similar across shocks.
3.4
Historical events in the European gas market

Before analysing the transmission of the different types of gas shocks to euro area prices,
we show how the model interprets the unprecedented gas price rise in 2022 in terms of
driving factors, and compare it with previous historical episodes of heightened gas price
volatility as a way of validating the model.
Inventory shocks play a
slightly smaller role, accounting for 17% of gas quantity and 23% of gas price fluctuations
while the residual component (i.e.
4
Pass-through of gas price shocks to consumer prices

The pass-through of gas price shocks to inflation is likely to be multi-faceted.
We first consider four outcome variables y: the European gas price, euro area HICP,
core HICP and energy HICP.
Third, depending on the driving factor, gas price increases can pass through to core
inflation in the euro area.
The results underline that gas price shocks can have important implications for inflation in the euro area ? depending on the driving factor of higher gas prices.
Casoli, C., Manera, M., and Valenti, D. ?Energy shocks in the euro area: disentangling
the pass-through from oil and gas prices to inflation?.

A forward-looking tracker of negotiated wages in the euro area

Retrieved on:

Saturday, February 10, 2024

Online, Blog, Country, Monetary Policy Committee, Deutsche Bundesbank, The, Bank of Greece, Bank, Statistics, Growth, No-no, GDP, Working Group, Projection, Calendar, Curve, Database, Selection bias, Trinity College, CPH, Lecture, RHS, MPC, Inflation, Food, Unemployment, Private sector, Journal, National Bank of Belgium, CPE, BDF, WGF, Eurostat, Social science, JEL, WT, Statistics Austria, Central bank, Forward, COVID-19, Labour, Government, Exercise, Social Security, Bank of France, Labour economics, NCBS, HICP, JRS, Bank of Slovenia, ULC, Letter, PDF, Bank of Lithuania, SSRN, Social, Work, COE, ECB, Research Papers in Economics, Data, Central Bank of Cyprus, Cross, Phillips curve, Employment, Forecasting, Welfare, Structure, Collective bargaining, Bias, Bank of Italy, De Nederlandsche Bank, Green, Rotation, Rigidity, School, Nationalbank, Section 5, European Central Bank, Reproduction, J50, Comment, NMW, Ministry of Labour, Index, Central Bank of Ireland, Research, E24, ISSN, Public sector, Limited, Chart, Education, Policy, Ministry, Banco de Portugal, Trinity College Dublin, Section 3, Disinflation, CBS, CBI, Coronavirus, Acceleration, National bank, Frankfurt, Bank of Finland, MPE, Section 4, Annual, OECD, Nickel, Clothing

Key Points:

ECB adjusts its capital key

Retrieved on:

Wednesday, January 3, 2024

Communication shocks from the US spill over to risk in the euro area and vice versa, but traditional US shocks show no spillover effects to risk.

Key Points:

Communication shocks from the US spill over to risk in the euro area and vice versa, but traditional US shocks show no spillover effects to risk.
Both monetary policy and communication shocks spill over to stocks, with euro area information spillovers being particularly strong.

Hawkish or dovish central bankers: do different flocks matter for fiscal shocks?

Retrieved on:

Wednesday, January 3, 2024

This column presents evidence on the role that US monetary policy plays in how fiscal spending affects the economy.

Key Points:

This column presents evidence on the role that US monetary policy plays in how fiscal spending affects the economy.
A dovish Federal Open Market Committee (FOMC) delays policy rate increases, while a hawkish FOMC tightens monetary policy more promptly, following increased fiscal spending.

Fireblocks Acquires Tokenization Firm BlockFold to Serve Industry's Largest Banks & Financial Institutions

Retrieved on:

Friday, September 29, 2023

BCG projects that the tokenization of financial assets on the blockchain will grow into a $16 trillion market by 2030 and will represent 10% of all financial assets.

Key Points:

BCG projects that the tokenization of financial assets on the blockchain will grow into a $16 trillion market by 2030 and will represent 10% of all financial assets.
Against this backdrop, Fireblocks has seen rapid growth in demand from customers, with a 350% increase in tokenization projects between 2022 and 2023, and 75% of tier-1 financial institutions exploring tokenization via its platform.
Bringing BlockFold's expertise in-house means that we can better serve tier-1 financial institutions to quickly and seamlessly bring tokenization projects into production and new assets onto the blockchain.
To learn more about how Fireblocks supports financial institutions with their tokenization operations, visit www.fireblocks.com/platforms/tokenization

Aurania Applies for Exploration License in Brittany, France

Retrieved on:

Monday, July 24, 2023

Toronto, Ontario--(Newsfile Corp. - July 24, 2023) - Aurania Resources Ltd. (TSXV: ARU) (OTCQB: AUIAF) (FSE: 20Q) ("Aurania" or the "Company") is pleased to announce it has applied for an exploration license in the Brittany Peninsula of northwestern France through a wholly-owned French subsidiary.

Key Points:

Toronto, Ontario--(Newsfile Corp. - July 24, 2023) - Aurania Resources Ltd. (TSXV: ARU) (OTCQB: AUIAF) (FSE: 20Q) ("Aurania" or the "Company") is pleased to announce it has applied for an exploration license in the Brittany Peninsula of northwestern France through a wholly-owned French subsidiary.
"Native gold in quartz vein, piece of vein containing more than 1 kilogram of gold, largest sample found in France kept as is, Bank of France deposit (loan)".
At the same time, and in tandem with its exploration project and activities in Ecuador, the Company is excited to actively pursue this extraordinary new gold exploration opportunity in Brittany, France, mentioned above.
The geological information contained in this news release has been verified and approved by Jean-Paul Pallier, MSc., Vice-President Exploration of the Company.

Internet Engineering Task Force standardises quantum-safe VPN protocol created by Post-Quantum

Retrieved on:

Thursday, July 13, 2023

These attacks see hostile actors steal encrypted data now which can be decrypted once a sufficiently mature quantum computer comes online.

Key Points:

These attacks see hostile actors steal encrypted data now which can be decrypted once a sufficiently mature quantum computer comes online.
Deploying a VPN based on new post quantum cryptography is the easiest way to protect data-in-transit from such attacks.
The novel approach prioritises interoperability by making it possible for multiple post-quantum and classical encryption algorithms to be incorporated into VPNs.
The easiest way to prevent Harvest Now Decrypt Later attacks is to deploy a PQ VPN based on the new IETF standard.

What information does the euro area bank lending survey provide on future loan developments?

Retrieved on:

Monday, January 16, 2023

The *euro area bank lending survey (BLS) * provides valuable information on bank lending standards and conditions as well as on loan demand in the euro area.

Key Points:

The *euro area bank lending survey (BLS) * provides valuable information on bank lending standards and conditions as well as on loan demand in the euro area.
*By collecting this information, the survey sheds light on the transmission of monetary policy in the euro area via the bank lending channel.
While the survey information is qualitative, the replies of the banks are closely related to actual loan growth and lending rate developments.
*BLS data provide timely information on bank lending conditions and loan demand.
The short reporting lag compared with other statistical data means that BLS data provide early information on key lending developments in the euro area, which has been especially valuable for identifying turning points in lending conditions and assessing lending developments during exceptional periods.
[4] Overall, the BLS has proved to be a very useful tool for understanding and analysing bank lending conditions in the euro area.
A first indication of the information BLS indicators provide for future loan growth is to consider cross-correlations between BLS indicators at different leads relative to data on actual loan growth.
BLS indicators either lead loan growth (negative value on the y-axis) or lag loan growth (positive value).
Beyond the simple correlations mentioned above, the information that the BLS indicators provide on future loan growth can be assessed by analysing their value in forecasting actual loan growth.
Broadly corresponding evidence on the information that the BLS provides regarding future loan growth is also found for individual euro area countries.
The BLS contains information on future loan growth not only at the aggregate level, but also for individual banks.
Loan demand also helps predict future housing loan growth at the bank level – banks reporting a decrease in demand experience lower loan growth over the following quarters compared with banks reporting unchanged or increased loan demand (Chart D, panel b).