Svensson: Practical Monetary Policy: Why Has the Riksbank’s Policy-Rate Path Been So High, and Why Did This Not Prevent the Recovery?
On Saturday, Deputy Governor Lars E.O. Svensson presented the lecture “Practical Monetary Policy: Why Has the Riksbank’s Policy-Rate Path Been So High, and Why Did This Not Prevent the Recovery?” at the National Conference of Swedish Economists at Uppsala University. Mr Svensson’s view was that the Riksbank’s repo-rate path had been too high. Among other reasons, this was due to an excessively high forecast for foreign policy rates, at the same time as the estimation and forecast of resource utilisation were also too high. He also maintained that the recovery of the Swedish economy benefited from the implementation by the market of low long-term interest rates and financial conditions that have been much more expansionary than is consistent with the high policy-rate path. He also observed that “a simple and transparent monetary policy framework has great benefits for policymakers and for external evaluators of monetary policy”. The lecture was based on a paper on monetary policy in Sweden and the United States that Mr Svensson presented at a conference arranged by the Brookings Institute in Washington DC, United States, on 15 September 2011. The paper can be downloaded from the Brookings Institute’s website.
See the presentation material from the lecture and read the summary of Mr Svensson’s lecture in the PDF file below.
