Normally, the Executive Board of the Riksbank makes five monetary policy decisions per year and the monetary policy preparation process lasts about five weeks. The preparations can be roughly divided into four stages. The phase before the Monetary Policy Department (APP) presents materials to the Executive Board, the actual meetings with the Executive Board in the Monetary Policy Group (PBG), the phase after these meetings, and finally the monetary policy decision-making meeting and communication in connection with it. This economic commentary gives an overview of how the process for producing the monetary policy decision-making works.
The drafting process is structured, but at the same time needs to be flexible. The commentary also describes how the coronavirus crisis tested flexibility - the Riksbank's readiness and ability to act quickly and in several different ways. It has been necessary to think in new ways, not only in terms of working methods and decision-making processes but also in terms of actions. The focus has been on understanding developments in real time and responding with appropriate, but in some cases untried, tools to address acute problems in the economy. All in all, the crisis management during the pandemic meant that the Riksbank's decision-making processes required even closer cooperation between the Monetary Policy Department, the Financial Stability Department, the Markets Department and also the Payments Department.
Following the very turbulent 2020, managing the consequences of the pandemic is now more a part of the normal, ongoing work at the Riksbank. The structure of the preparation process is largely the same now as it was before the crisis, but the content of the preparation has changed in several ways, partly as a result of the Riksbank's extensive holdings of securities. Monetary policy constantly faces new challenges, and it will continue to be important that that process is flexible and contributes to the Riksbank's capacity to act quickly and in different ways.
Author: Maria Sjödin Thank you to Björn Andersson, Meredith Beechey Österholm, Vesna Corbo, Charlotta Edler, Mattias Erlandsson, Jesper Hansson, Jens Iversen, Peter Kaplan, Stefan Laséen, Åsa Olli Segendorf, Marianne Sterner and Anders Vredin for their valuable comments. , works in the Riksbank’s Monetary Policy Department.