SEB saw inflation targeting – Dagens Industri

The economists Robert Bergqvist and Frisén noted at a press briefing that almost all central banks are now “inflation-nutters”, something that just a few years ago took a very clear distance away.

Aggressive policy, prevent the general fall in prices postpone consumption and investment, and thus leads to deeper recession, but SEB economists note that there is no obvious conclusion. The concern is based primarily experiences from the 1930s.

“The idea might is losing a bit in the status … supply-driven price declines, as the price of oil, there are no violent reasons to fight “said Frisén.

The economists note that Studies from the BIS has shown that the historical relationship between deflation and growth has been weak, except for that 30′s depression.

The economists also noted be an argument for inflation targeting was to create stability and predictability and to avoid arbitrary redistribution of wealth. But the experience of the now monetary policy is that it works in exactly the opposite direction to that intended.

“A basic aim has been lost. The growing wealth gaps thereto hamper consumption and reduces monetary policy efficiency accentuates this dilemma, “write economists in the report.

According to the SEB economists seem that now that the debate is moving in a direction where inflation targeting downsides emphasized to a greater extent, and the considers it possible that the next few years will imply a move towards a more softened interpretation of the inflation targets.

“For example, by that the idea of ​​leaning against the wind and avoid excesses in asset prices will have a renaissance, “writes SEB economists.

Robert Bergqvist asks at the same time if it is not time to shout back the” old Stefan Ingves’ and to apologize for that he had been driven to completely disregard household debt and house prices in monetary policy.

The Riksbank has reiterated urged other agencies to quickly grasp the problems, but it is clear that all hopes of macro-prudential measures to manage the problems have been exaggerated.

SEB economists dare not to believe that a fundamental change of the monetary policy framework will be for the foreseeable future, at present no clear alternative.

“Probably it requires , a new deep economic crisis for a change to come about,” write economists.