af Jochnick: Hearing of the Riksdag Committee on Finance on monetary policy 2018
On Thursday, the entire Executive Board of the Riksbank took part in an open hearing of the Riksdag Committee on Finance on the report Account of Monetary Policy 2018. The report forms part of the material for the annual assessment of monetary policy by the Riksdag Committee on Finance.
Date: 02/05/2019 10:00
Speaker: First Deputy Governor Kerstin af Jochnick
Place: Förstakammarsalen, the Riksdag, Stockholm
Governor Stefan Ingves opened the hearing by summarising the report. Robert Bergqvist and Anna Seim presented their views on the Account and on the monetary policy stance. After this, First Deputy Governor Kerstin af Jochnick commented on the discussion before committee members asked questions.
Kerstin af Jochnick discussed the basis for the monetary policy conducted by the Riksbank in recent years, describing three central issues that have coloured the debate:
- “Why is the inflation target necessary?”
- “Why is the target 2 per cent?”
- “Why is confidence in the inflation target important?”
“It is useful to bring the discussion down to this basic level, as this makes it easier to see where the dividing lines go,” said Kerstin af Jochnick and continued: “I believe there is general agreement that the inflation target has been good for Sweden, but sometimes arguments arise in the debate that do not seem to agree with this. If one advocates a different system for monetary policy, it would be interesting to hear how this would look and how it would outweigh the benefits with an inflation target.”
The level of the target has been debated more, but Ms af Jochnick noted that lowering the target below 2 per cent would make it more difficult for the Riksbank to counteract economic downturns. Finally, she said that the answer to the third question – that confidence in the inflation target is of decisive importance for the target to function as a stabilising benchmark – is the essential motive for the expansionary monetary policy conducted by the Riksbank in recent years.