Account of monetary policy 2018 Kerstin af Jochnick First Deputy - - PowerPoint PPT Presentation

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Dec 17, 2022 414 likes •515 views

Account of monetary policy 2018 Kerstin af Jochnick First Deputy Governor Riksdag Committee on Finance 02/05/2019 Three central questions Why is confidence Why is the inflation Why is the target 2 in the inflation target necessary? per

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Account of monetary policy 2018

Riksdag Committee on Finance 02/05/2019

Kerstin af Jochnick First Deputy Governor

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Three central questions

Why is the inflation target necessary? Why is the target 2 per cent? Why is confidence in the inflation target important?

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A common benchmark for price-

setting and wage formation

Joint view facilitates long-term

planning

Improves the opportunity for

good economic developments

Why is the inflation target necessary?

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Same level in almost all high-income

countries with an inflation target

Lowering the target would not resolve

structural problems, e.g. with household debt

Inflation targets should not be changed

too often

A lower target could give more and

longer periods with a negative repo rate

Why is the target 2 per cent?

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More difficult to give consideration to

anything other than inflation if expectations are not anchored

Risk that inflation and inflation

expectations will fall, which could give more periods with a negative repo rate going forward

Why is confidence in the inflation target important?

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Three central answers

The inflation target contributes to stability and good economic developments Lowering the target makes it more difficult for monetary policy to stabilise the economy Confidence in inflation target is decisive for the target to function as stabilising benchmark

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Sweden has an inflation target – not an exchange rate target

Note. Index, 18 Nov 1992 = 100 The KIX (krona index) is an weighted average of the krona exchange

rate against currencies in countries that are important for Sweden's international transactions.

Sources: National sources and the Riksbank

Weaker krona Stronger krona

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Inflation targeting has contributed to a comparatively good economic development

Note. Index, 2007 = 100.

Source: Eurostat, OECD and the Riksbank

GDP per capita

90 95 100 105 110 90 95 100 105 110 07 09 11 13 15 17 Sweden USA Euro area United Kingdom

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