Ohlsson: Towards the target in an orderly manner
"There is a clear division of responsibilities; the Riksbank is responsible for monetary policy and the social partners determine wages." This is being emphasised by Deputy Governor of the Riksbank Henry Ohlsson as he addresses a National Mediation Office seminar on the economic conditions for wage formation.
The inflation target is an important benchmark for price-setting and wage formation and since its introduction it has contributed to more stable wage growth and greater purchasing power for wage-earners. "It is important to safeguard this cornerstone of economic policy", says Mr Ohlsson. "This is why we are pursuing such an expansionary monetary policy".
And the policy is having an effect. The low level of interest rates is a key reason why the Swedish economy is growing well and there is a clearly upward trend in inflation since last year. "It is important that inflation continues to climb towards our target. But this must take place in an orderly manner, so as not to threaten production and employment. What we can do is to inspire confidence in the inflation target, which can in turn provide a starting-point for the negotiations," Mr Ohlsson concludes.
Follow the adjoining link to see the slides Mr Ohlsson is showing at the Mediation Office seminar.
