Ms Skingsley begins by pointing out that it is important for inflation to rise now. "We are not yet home and dry and we certainly shouldn't underestimate the risks of setbacks. For this reason, we Executive Board members are prepared to make monetary policy even more expansionary if we assess there is a threat to the upturn in inflation," says Ms Skingsley.
But although the focus of the debate in Sweden is now of necessity on current monetary policy, she feels that we must not lose sight of the longer perspective and the international discussions on possible changes in the inflation-targeting policy, given the experiences of the financial crisis and the post-crisis period. "It is important that we also take time in the Swedish debate to focus on the questions of principle so that the discussions of our own monetary policy framework are constructive," says Ms Skingsley.
One such question is what role monetary policy should play with regard to promoting financial stability. The experiences of the financial crisis show that financial imbalances can lead to major socio-economic costs. Macroprudential policy is intended to be the first line of defence. But the topic now being discussed, and on which the jury is still out, is how strong this first line of defence will be and whether monetary policy should sometimes try to help by giving consideration to the risks linked to these imbalances. "However, one condition for this consideration is that inflation is not too far from the target and that inflation expectations are firmly anchored," says Ms Skingsley.
She also talks about the recent discussions on whether the central banks' inflation targets should be changed and she points out that while the Swedish debate has primarily contained arguments in favour of lowering the target, the international discussion has instead focused on whether the target should be raised. "This type of question will probably be discussed further." However, according to Ms Skingsley, the current framework for inflation-targeting policy has worked well for a long time and potential changes should be made cautiously and are thus not in the pipeline in the near future. "Setting an inflation target for the first time is one thing, but changing a target that has become established is quite different."
So will everything be the same as it was prior to the crisis? asks Ms Skingsley in conclusion. Analyses and working methods definitely need to be adapted to experiences and changed conditions to remain relevant. These changes are being made and can be seen in the work of the Riksbank and other central banks. With regard to major changes in the framework for the actual inflation-targeting policy, the answer is not so clear-cut. "This remains an open question that spans legislation, research and all those working with monetary policy," concludes Ms Skingsley.
Read Ms Skingsley's entire speech Inflation-targeting policy after the financial crisis at Almega.