Inflation is coming down around the world, and central banks are lowering interest rates accordingly. The most important central bank, the US Federal Reserve, is expected to announce the first reduction in interest rates in four years. Today's Washington Post says that experts are divided on whether it'll be a standard quarter-point change, or if they'll go all out with a half-point change (https://www.washingtonpost.com/business/2024/09/18/fed-rate-cut-fomc/).
Central bank interest rates affect just about everything in the economy. When they're higher, money costs more. It costs more to take out a mortgage or car loan, so people delay buying houses and cars, or buy smaller ones. It costs more for a business to borrow money, so they make smaller investments. Sounds like that would slow down the economy, right? Indeed, that's precisely the point; raising interest rates is one way to slow the economy, and thus reduce inflation. Once inflation is (mostly) beat, we can lower interest rates again. Which is precisely where things seem to stand now in the US.
This week, we'll look at interest rates at central banks around the world. The data comes from the Bank of International Settlements (BIS, http://bis.org/), a sort of central bank for central banks. We'll see what rates are, what they were, and how they're changing.
Data and six questions
The data, as I mentioned, comes from BIS, which supplies quite a bit of data. Go to their data site, at
https://data.bis.org/topics/CBPOL/data
and click on "export." You can choose to download the data in CSV from
https://data.bis.org/static/bulk/WS_CBPOL_csv_col.zip
Or you can click on "code snippet," getting Pandas code that will allow you to download the data, via the BIS API, into Pandas. I would actually recommend against this last option, just because I found that downloading multiple times in a row will result in your computer not being able to download any more; they seem to have some sort of limiting system.
[Note: I got something wrong with the above URLs and instructions. I'm not quite sure what, but I've put the file that I intended for you to download at https://files.lerner.co.il/central-bank-data.csv.zip .My apologies!]
I have six tasks/questions for you this week. The learning goals include working with dates, grouping, pivot tables, handling missing data, and string handling, among others. I'll be back tomorrow, as usual, with my solutions and Jupyter notebook. Meanwhile, here are my questions:
- Create a data frame from the BIS data. Keep only the rows in which
TIME_PERIODhas two-characters. Turn the remaining values inTIME_PERIODintodatetimevalues, and then keep only those rows starting in the year 2000. - What is the latest interest rate for each central bank? Which five banks have the highest interest rates in the world, and which have the lowest?