The Riksbank's comment on the Swedish National Audit Office's report

News, Consultation responses The Riksbank shares the National Audit Office's view that the securities purchases were generally carried out in a transparent manner and with a solid basis for decision-making, but that the risks could have been reported more clearly. Like the National Audit Office, the Riksbank sees securities purchases as an important tool also in the future when major shocks occur on the financial markets. However, unlike the Swedish National Audit Office, the Riksbank recognises that circumstances may arise in the future, in which purchases of securities may be an appropriate way to influence inflation. This is what the Riksbank writes in its comment on the Swedish National Audit Office's review of the Riksbank's securities purchases 2015-2021.

The Swedish National Audit Office states in its review of the Riksbank's purchases of securities 2015-2021 that the purchases were generally carried out in a transparent manner and with solid decision-making data, but that there is room for improvement. The Riksbank agrees that the expected costs, risks and side effects of the securities purchases could have been described more clearly.

The Riksbank also agrees with the National Audit Office’s assessment that the asset purchases made at the beginning of the pandemic reduced the impact of the pandemic on the economy by counteracting the prevailing financial stress, keeping interest rates low and maintaining a functioning credit supply. When major shocks arise on the financial markets, threatening financial stability and affecting the monetary policy transmission mechanism, asset purchases will continue to be an important tool.

The effects of asset purchases to stimulate growth and inflation are uncertain, especially in situations where financial markets are functioning normally. In more normal situations, changes in policy rates will be the main tool for monetary policy. However, situations may also arise in the future where purchases of securities could be an effective means of influencing inflation. The threshold for such measures will be high. This applies in particular to the purchase of private securities. Situations may arise where the policy rate comes close to its lower bound and when the credibility of the inflation target is threatened. One option would then be to lower the interest rate into negative territory as much as possible, but there are also uncertainties and risks with such a move. Another option would be to focus fiscal policy more actively on stabilising inflation. When the policy rate is close to its lower bound, and when the credibility of the inflation target is threatened, all measures have some difficulties, both asset purchases and alternative ways of stimulating the economy – such as a negative policy rate or more expansionary fiscal policy.

The effects of asset purchases are more uncertain than the effects of regular interest rate policy, partly because experience is more limited. Further analysis of this monetary policy tool is required. The Riksbank is constantly learning from the experiences of the Riksbank and other central banks with regard to asset purchases.

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Updated 02/02/2024