Svensson: Assessment of monetary policy in Sweden in 2009
Every year, the Riksdag Committee on Finance examines and assesses the monetary policy conducted by the Riksbank during the preceding years. The Riksbank compiles and publishes material for this assessment. We published such material just a few days ago.
The main message in the material is that the Riksbank has reacted forcefully and successfully to the major shocks that have occurred since the autumn of 2008. The global recession that followed in the wake of the financial crisis surprised us all and was met by a marked shift in monetary policy. The Riksbank made rapid and repeated cuts in the repo rate up to the summer of 2009. However, the repo-rate cuts led to lower mortgage rates, which in turn pushed down CPI inflation. The development of CPIF inflation, which excludes the effects of the Riksbank's repo-rate changes, was more stable than that of CPI inflation and was close to the target. The series of repo-rate cuts that began in the autumn of 2008 was necessary in order to attain the inflation target over time and to mitigate the effects of the financial crisis on the real economy. Without these substantial reductions in the repo rate, GDP would have fallen even more. Monetary policy was also complemented by extensive lending to the banks. These complementary measures have helped the financial markets to function more effectively, eased the supply of credit and increased the impact of monetary policy.
Read the whole speech in the PDF file below.
