Ingves: Introduction on monetary policy and financial stability
More than a year has passed since the financial crisis swept over the Swedish economy. It has been a dramatic year, which, despite forceful measures by central banks and other authorities around the world, has led to the worst economic recession for many decades. The recovery will take time, both with regard to the financial system and the economy in general. But it has begun, even if there is considerable uncertainty over future developments and there are many risks lining the path.
The Riksbank is assuming that the monetary policy now conducted will contribute to a stable recovery and to attaining the inflation target of 2 per cent. The repo rate is expected to remain at a low level until autumn 2010. To ensure that monetary policy has the intended effect, the Riksbank has also taken supplementary measures in the form of offering the banks fixed-interest loans. This is expected to contribute to continued low interest rates for households and companies.
The financial markets now function better. The need for the authorities’ crisis measures will decline as conditions in the financial sector improve and the world economy shows clearer signs of a recovery. However, the possibility of further complications arising can not be ruled out. If all goes well and the situation remains stable, then it is time to move on without support. But we are not there yet.
It appears as though the Swedish economy will “land on its feet” this time, but it is also necessary to keep our balance in the future. Creating the right conditions for this is a difficult but important task. We must tackle it not only at a national level, but also from a global perspective. The financial supervision map must be redrawn. The work has already begun, and we are in a phase of the crisis where there are good prospects for achieving change. It is now that we have the chance to really create something sustainable that will work better. We must not miss this opportunity!
Read the whole speech in the PDF file below.
