Swedish monetary policy in line with the Taylor Rule

Economic Commentaries, News Swedish monetary policy, since the inflation target was introduced, is in line with a so-called Taylor Rule. Today's very expansionary monetary policy, with a negative interest rate, is in line with the Taylor Rule if one takes into account the fact that the long-term real interest rate varies over time and is currently very low. This is made clear in the economic commentary published today.

Monetary policy is usually described in many contexts in terms of a so-called policy rule. One such rule is the Taylor Rule, which has received widespread publicity in the past twenty years. One reason for its popularity is that it appears able to describe monetary policy in many countries relatively well, at least under normal economic circumstances. Another reason is that it has been shown in economic models to provide good guidance on how monetary policy should be conducted. The rule is often used as a benchmark when monetary policy is to be evaluated; no central bank would, however, follow the Taylor Rule to the letter.

About the Economic Commentaries

The Riksbank's Economic Commentaries contain, for instance, short analyses and debate articles. The opinions expressed in Economic Commentaries are those of the authors and are not to be seen as the Riksbank's view.

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Updated 15/01/2018