“We are in a situation where the policies and regulations that central banks followed in recent decades must be reconsidered”, says Stefan Ingves according to a prescribed speech.
another question is whether inflationary policy should take into account financial stability. Ingves suggests that the inflation target should be the same parent financial stability today. There is much to suggest that financial stability should in principle be a target not only for macro-supervision, but also for monetary policy reasons the Governor.
“I think it’s obvious that there are close links between monetary policy and financial stability . the degree of financial stability affect how monetary policy affects inflation and employment. at the same time, price stability contributes to a safe and efficient payment system and facilitates the stability of the financial system, “he says.
Ingves also want to see a “tie-back” in terms of responsibility for macro-prudential supervision, that is, who should have responsibility for financial stability.
“There are significant flaws with unclear mandates, unclear processes and inefficiencies ultimately threaten financial stability in Sweden, “said Mr Ingves.
Stefan Ingves opens possibly the margin for him to change feet, that he may get a more flexible view of the inflation target and the monetary policy, according to the Nordea chief economist Annika Winsth . But after the title of the century have signaled a clear swing, so this was a disappointment, says Winsth.
– It’s a frustrated Governor we look, she says.
According to her, asking Ingves more clarity in the rules that the Riksbank will have to follow, but she is not very hopeful that there will be no clearer rules.
the Crown did not move at all contents of Stefan Ingves speech. It was strengthened on the other hand immediately when the Riksbank on its website for a number of weeks ago announced speech entitled “Time for reconsideration – in the mind of a central banker.”
Expectations of a shift in Swedish monetary policy has ratcheted up before Ingves speech held at Stockholm School of Economics. SEB’s economists are among those who hoped for a new bid in terms of the inflation target.
In a critical debate article in the Swedish newspaper Svenska Dagbladet Enterprise writes SEB economists Robert Bergqvist and Frisén that the Riksbank takes a special position by bringing an exceptionally expansionary monetary policy despite high growth and problems that growing household debt and soaring house prices.
They call for a tolerance band around the inflation target, so that monetary policy and the policy rate can be better adapted to the economic situation.
interest Ingves speech is great in the world of finance, with long articles in newspapers such as the Wall Street Journal, where the situation in Sweden is singled out as a prototype to test what happens if an aggressive stimulus policies to bring up inflation, while global inflationary trend is weak.
Even the Financial Times has posted and believe that the speech could make Wednesday a landmark for those who follow the Riksbank’s monetary policy.
“Potentially he may signal a shift in the central bank’s inflation target,” writes the Financial Times.
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