And the country most severely affected is the United States where the Federal Reserve today cut interest rates by 75 basis points – the largest reduction since August 1982 – to mitigate “increasing downside risks to growth”. The contraction in the US housing market has deepened and unemployment there is rising. I want tonight to explain the nature of the challenges facing us and why many of them originate outside our shores. Exactly five hundred years before the Bank of England was given its independence, an Italian migrant who had made his home in Bristol, Giovanni Caboto, or John Cabot as he was known, set sail from this great city in May 1497 and became the first European to land on the North American mainland since the Vikings. A seafaring voyage like Cabot’s is a good analogy for the challenges facing the British economy, which will have to navigate some distinctly choppy waters in 2008. The challenge to the Monetary Policy Committee’s ability to navigate our way through the next year reflects two strong economic winds; one from the west and one from the east. They correspond to what economists call demand and supply shocks. The former is the credit crunch which has blown across the Atlantic, and threatens a sharp slowing in output growth. The latter is the rise in energy and food prices, reflecting continued strong growth in Asia, that, together with rising import prices, threaten to lift inflation noticeably above target in the coming months.
Jon Nicolaisen: Responsible investment and active ownership Speech by Mr Jon Nicolaisen, Deputy Governor of Norges Bank (Central Bank of Norway), at Norges Bank, Oslo, 19 November 2019. * * * The graphs can be found on the Norges Bank’s website. Introduction In 1990, visionary politicians decided to establish the Government Petroleum Fund, later renamed the Government Pension Fund Global (GPFG). On Tuesday of this week, the value of the fund passed NOK 11 000 billion – or over 3½ times Norwegian mainland GDP. The fund is now among the largest shareholders in many of the world’s listed companies. Chart: From natural resources to financial wealth What started as oil wealth in the ground has been transformed into savings and financial wealth abroad. Under the fiscal rule, we should only spend the expected real return on the fund. As long as we only spend the return, we ensure that the fund will benefit future generations. In 2020, withdrawals from the fund accounted for more than one krone in five in the central government budget. This means that the fund indirectly finances tens of thousands of public sector employees and ensures that taxes are lower than they would otherwise be. We might say that Norway has moved from being an oil nation to being an investment fund nation. The assets in the fund belong to the Norwegian people. The most important decisions, such the choice of the fund’s equity share, are anchored in the Storting (Norwegian parliament).