Öberg: My view of monetary policy 2006-2011
First Deputy Governor Svante Öberg gave a speech on 18 March at Handelsbanken on his views of the monetary policy conducted during the more than five years that he has been a member of the Executive Board of the Riksbank. He also described his views on current monetary policy, based on the monetary policy meeting held in February.
Mr Öberg believes that monetary policy was too expansionary in Sweden and abroad during the years prior to the recent financial crisis. Interest rates were very low, in real terms, when seen in an historical context. An expansionary monetary policy was one of several contributing factors to a bubble arising in the US housing and mortgage market. When the bubble burst, the rest of the world suffered the consequences.
However, he believes that the measures taken by the Riksbank in connection with the financial crisis worked well. They contributed to maintaining financial stability, to holding inflation and inflation expectations close to the target level and to slowing down the fall in production and employment. The strong recovery in the Swedish economy last year has meant that monetary policy has moved in a less expansionary direction.
Given the assessments of economic developments made at the monetary policy meeting in February, Mr Öberg felt that it will be necessary to increase the repo rate at each monetary policy meeting this year, and perhaps also next year.
Read the entire speech in the PDF file below.
