Ingves: Monetary policy in an uncertain economic policy landscape
”Economic activity in Sweden is now beginning to improve, supported by very low interest rates charged to households and companies and by stronger developments abroad. However, our forecasts are thus uncertain, especially a couple of years ahead.” These comments were made by Governor Stefan Ingves during a visit to Göteborg where he held a speech on the economic situation and his views on monetary policy.
He pointed out that the forecast is as always based on uncertainty over the conditions for monetary policy in the coming years. Among the factors contributing to the mood of uncertainty, Mr Ingves mentioned the conflict in Ukraine, the European Central Bank's Asset Quality Review and how monetary policy in other countries develops. He also mentioned domestic uncertainties such as factors behind the low inflation, the scope and effects of coming measures to slow down growth in housing prices and indebtedness.
"My impression is that we are now in a situation where the conditions for monetary policy are perhaps even more uncertain than usual", said Mr Ingves. He also explained how he thought one should deal with the uncertainty in monetary policy decision-making. One obvious measure is to try to acquire further knowledge of the sources of the uncertainty. " The difficulty in quantifying everything that needs to be taken into account means that monetary policy cannot be a precise feat of engineering; it is more a case of risk management, where one places particular emphasis on avoiding the really serious negative scenarios that it is possible for monetary policy to affect", Mr Ingves continued.
"Anyone wanting to know more definitely what will happen needs a crystal ball that can describe all the situations that will arise here in Sweden and abroad over the coming years. However, there is no such crystal ball, so as always when making decisions in an uncertain situation we will have to deal with what happens as it comes", he concluded.
Read the entire speech: Monetary policy in an uncertain economic policy landscape
The members of the Executive Board of the Riksbank visit various parts of Sweden during the autumn and spring to present the conclusions of the monetary policy decisions. The members then hold speeches and meet representatives of the business sector, local government, media and colleges in the area.
