Riksbank’s response to Goodfriend & King report
Date
14/04/2016
The Executive Board and the General Council of the Riksbank note that the report by Goodfriend and King, “A Review of Swedish monetary policy 2010-2015”, commissioned by the Riksdag Committee on Finance, contained mainly positive comments on the Riksbank's work with monetary policy and financial stability. Both the Executive Board and the General Council welcome the coming review of the Sveriges Riksbank Act and consider that several of Goodfriend & King’s recommendations should be taken into account in such a review.
"A review of this act is a good way of seeing whether the Sveriges Riksbank Act is appropriate for the tasks the bank faces. At the same time, it is important to remember that the flexible inflation-targeting regime has functioned well, which the report also notes," says Governor Stefan Ingves.
Particularly important to review responsibility for financial stability
The Executive Board and the General Council consider, as do Goodfriend and King, that it is important to examine the area of financial stability in a coming review of the Sveriges Riksbank Act and to clarify the Riksbank's responsibility in this area. The Executive Board emphasises, in line with the report, the importance of strengthening the organisational and legislative framework for macroprudential policy. The Board considers that this framework needs to be reviewed again.
Several monetary policy issues deserve further discussion
The Executive Board points out that the report highlights several monetary policy issues that deserve further analysis and discussion. One important question is how detailed the objective for monetary policy should be stipulated in law.
The Executive Board considers there are several advantages to changing the variable for the inflation target from the CPI to the CPIF or HICP, and welcomes continued discussion of this question, although the Board does not as yet take a stance on this proposal. The Executive Board agrees with Goodfriend & King's recommendation that monetary policy should continue to focus on attaining the inflation target and in addition give consideration to developments in the real economy.
The Executive Board and the General Council have presented two separate consultation responses regarding the Committee on Finance's third external and independent evaluation of the Riksbank's monetary policy. This evaluation was made by Marvin Goodfriend and Mervyn King and published on 19 January 2016.
