Chat with Svante Öberg 20 April 2010
Governor Stefan Ingves chatted in Swedish on the Riksbank's website. This is a translation into English of the questions and replies.
Have you changed inflation target? You only talk about something called the CPIF, rather than the CPI. Oskar
Answer: Hi, Oscar. No, we haven’t changed inflation target. However, as the CPI is impacted directly by our own repo rate decisions, it has shown, and will continue to show, major variations in the period 2008–2012. These are temporary effects. The CPIF underlying inflation rate is more stable and provides a better measurement of inflationary pressures. Both measures will converge over the long term. Regards, Svante.
--------------------------------------------------------------------------------------------
How decisive will GDP outcome for the first quarter be for the Riksbank’s decision on a possible interest rate increase on 30 June? Anders
Answer: Hi, Anders. It will be one of many factors we will have to take into account. Regards, Svante.
------------------------------------------------------------------
Hi. What view do you take of the weak development of productivity seen in recent years? What do you believe lies behind it? Karine
Answer: Hi, Karine. There are several reasons for the weak figures reported over the last three years, including the unusual severity of the recession and the fact that companies have retained their labour forces to a greater extent than normal. Regards, Svante.
--------------------------------------------------------------------------------------------
During the period 2005–2007, we experienced an extremely high level of credit-driven global growth, ending in a crash. Can mature economies cope with such growth levels without finally crashing? Per
Answer: Hi, Per. The difference is that, at that point in time, the level of resource utilisation was quite high, whereas, in the period ahead, it will be quite low. We do not believe that the forecast we present suggests any major problems. Regards, Svante.
--------------------------------------------------------------------------------------------
In its forecasts, how much consideration does the Riksbank take of international work on tightening up the financial regulatory framework, one of the effects of which may be to push Swedish mortgage rates upwards? Knut
Answer: Hi, Knut. As far as we can judge, this will not have any dramatic consequences, although, at present, there are no concrete proposals for us to consider. We are following this matter carefully and also participating in the international work. Regards, Svante.
--------------------------------------------------------------------------------------------
Why is the CPI forecast so much lower as compared with February? Göran Nilsson
Answer: Hi, Göran. This is because the weighting figures in the CPI have been altered (greater emphasis has been placed on the variable interest rate) and we have changed our method for generating data so as to correspond with the method of calculating the CPI used by Statistics Sweden. Regards, Svante.
--------------------------------------------------------------------------------------------
You calculate that GDP will grow by just over 3.5 per cent on an annual rate for 13 quarters in a row. How likely is this? When did this last happen? Per
Answer: Hi Per. We normally experience rather strong GDP growth following a severe downturn. An equivalent average level was last experienced in 2005–2007. Regards, Svante.
--------------------------------------------------------------------------------------------
What do you mean by “normal monetary policy"? Sofia
Answer: Hi, Sofia. In a normal situation, inflation is 2% and the real interest rate is 2% (interest rate 4%). Over the course of the economic cycle, the real interest rate varies between 0% and 4%. At present, the real interest rate is -1%. This is a crisis interest rate. Regards, Svante.
