Skingsley: Low interest rates contributing to strong economic activity and rising inflation
"Expansionary monetary policy with low interest rates has been contributing to strong economic activity and rising inflation since last year," Deputy Governor of the Riksbank Cecilia Skingsley will say today when she gives a presentation at SIMRA - Swedish Society of Business Economists.
Skingsley points out that the Riksbank's monetary policy with interest rate cuts and a bond purchasing programme is having an effect. The low interest rate level in Sweden has contributed to relatively strong economic activity with stable GDP growth, falling unemployment and rising inflation since last year. "The economy is developing in line with the Riksbank's forecasts, including the most recent inflation measurement in October," Skingsley believes.
A high level of preparedness to take further stimulatory monetary policy measures is still needed, however, given international uncertainty and inflation having been low for a long time," Skingsley points out.
She also comments on the recent debate about both the monetary policy being pursued and the monetary policy framework.
She believes the inflation target has contributed to stable expectations for price and wage formation, which has been favourable for economic development.
"Changing the target because we are coming out of a period of long-term low inflation would not lead to increased confidence in the inflation target," Skingsley says.
She also welcomes the upcoming evaluation from the Committee on Finance's special investigators Professor Mervyn King and Professor Marvin Goodfriend. "Their report will be an interesting contribution to the Swedish discussion about the inflation target," concludes Skingsley.
