Ohlsson: Monetary policy and wage formation

There is a clear division of responsibilities; the Riksbank is responsible for monetary policy and the social partners determine wages, said Deputy Governor Henry Ohlsson, speaking at the Swedish National Mediation Office’s seminar on the socioeconomic conditions for wage formation held in Stockholm today.

Date: 16/10/2017 09:00

Speaker: Deputy Governor Henry Ohlsson

Place: National Mediation Office

Mr Ohlsson described the Riksbank's work on safeguarding the role of the inflation target as an anchor for price-setting and wage formation. "After a long period with inflation below the target, it has risen again and we have good economic activity in Sweden. Monetary policy has contributed to this," says Mr Ohlsson. However, he emphasised the need for an expansionary monetary policy so that inflation can remain close to 2 per cent going forward.

The Riksbank recently decided to make the CPIF the formal target variable for monetary policy and to use a variation band for the outcomes for CPIF inflation. This band serves as a reminder that inflation cannot always be exactly 2 per cent in each individual month. However, Mr Ohlsson emphasises that: "I want it to be crystal clear to the social partners that 2 per cent inflation is the target for monetary policy. The Riksbank will always aim for this, regardless of whether inflation is inside or outside the variation band."

Updated 05/01/2018