Mr Ingves disagreement: ”Need to put down the foot” – Svenska Dagbladet

“We think that it has been successful the crown has been strengthened, but weakened, we will have the benefit of in 2017″, says Stefan Ingves. Photo: Magnus Hjalmarson Neideman

Only twice previously governor Stefan Ingves used his casting vote. The latest was in september 2008, when a disagreement, the executive board raised the key interest rate to 4.75 per cent. The decision met with severe criticism, the financial system shook, and shortly thereafter, forced the Riksbank to embark on a long series of interest rate cuts.

Now, eight years later, it is time again. Stefan Ingves Kerstin af Jochnick and Per Jansson, pushed through the decision to extend the stödköpen of government bonds and inflation linked bonds with 30 billion.

Martin Flodén just wanted to buy for 15 billion, Henry Ohlsson and Cecilia Skingsley wanted to finish the purchases are now.

Stefan Ingves did not mention the disagreement at all during his presentation. The topic came up when reporters had the opportunity to ask questions.

When you realized that you would use his casting vote?

– There is a discussion going on for a long time. But in the end, it is at the meeting itself, it is then sitting and voting.

it Was obvious to use utslagsrösten and do not try to negotiate a solution that all could stand behind?

– There is no intrinsic value to use my casting vote. But it follows from that office that you need to put down the foot and vote on what you believe in.

How problematic is the disagreement?

” I don’t think there are any major worries. With six people, one may expect that there are different views. I want to turn that around and say that we agree on the most part, the repo rate, if the repo-rate path and if all the forecasts.

the Riksbank’s decisions was, thus to allow the repo rate to remain at minus 0.5 percent but extend the stödköpen with 30 billion in additional six months. Stefan Ingves justify stödköpen with that they have two effects.

– We buy government bonds every week. It presses down the general level of interest rates and it increases the amount of money in the system. It will lead to more lending and it contributes to an increased demand in the Swedish economy so that prices will rise.

the Riksbank’s message is still that the probability is greater for a rate cut than an increase. Stefan Ingves was also careful to emphasise that the Riksbank could do more.

“We will make losses on stödköpen of the bonds. But we are not profit-maximizing, our goal is inflation,” says Stefan Ingves. Photo: Magnus Hjalmarson Neideman

the Disagreement within the executive board can also be interpreted as the Riksbank is approaching the end of the road. The three governors who had reservations against the extended trend had probably also reserved themselves against further interest rate cut. In the financial market also strengthened the crown after the announcement, and traded on the onsdagseftermiddagen around 9.64 against the euro and the 9,23 against the u.s. dollar.

the Fact remains that the krona has weakened sharply since the summer. But Stefan Ingves sees no problems with the weak exchange rate.

” We have a floating exchange rate. It is good for the Swedish economy at the current krona, not least in export industries, and contributes to that inflation rises, which we want to achieve.

You see no problem if the crown would go against 10 against the dollar?

” No, I can’t see that it would be a problem in itself, We have a floating exchange rate and then you have to expect that the crown will sometimes move around a lot.

once Again warned Stefan Ingves for household debt. He said that the major Swedish banks are usually called commercial banks, but that they, in fact, is bolånebanker. The politicians in government and parliament were invited once again to review housing policy, tax policy and macroprudential supervision.

But if the politicians would listen to Stefan Ingves and lower ränteavdragen, reintroducing a property tax, or impose a so-called skuldkvotstak it will affect household behavior. Households would likely cut down on their consumption which in turn would affect the entire economy and also inflation. Stefan Ingves says that it is about a balance.

– the Measures will reduce the demand to some extent, but it’s perfectly okay. Lower debt makes the american economy more robust in the event of future unforeseen events. As long as we are in a situation where households have very high debt, it will constitute a material risk for the development in Sweden.

Are you prepared to accept a lower inflation rate if it can be explained by the fact that others have introduced measures relating to household debt?

– Yes.

Is there any point, then the liabilities would increase so much, that you would act and raise the repo rate?

” That I cannot answer at present. If we do not take care of the question of guilt in the Swedish economy will be the world that draw the eyes to themselves. Then we would get a sharp weakening of the krona, which would lead to inflation becoming too high. Then we would make up for it and greatly raise the interest rate. It is a particularly bad scenario for a great many harmed.

It sounds unlikely that you are in such a situation would raise the interest rate?

” We have the inflation target that we have. Interest rates would also rise in such a scenario, completely independent of what the Riksbank is doing, when investors do not want to finance the Swedish banks.