Monthly Archives: August 2014

Strange dissent by Ingves and af Jochnick – their policy-rate path apparently implies a more expansionary monetary policy

[English translation of a new Ekonomistas post (in Swedish).]

At the latest monetary-policy meeting, Governor Stefan Ingves and First Deputy Governor Kerstin af Jochnick dissented and entered a reservation against the decision to lower the policy rate to 0,25 percent and against the policy-rate path in the Monetary Policy Report. They obviously thought that their preferred policy-rate path would imply a less expansionary monetary policy than the majority’s path. But their path instead actually seems to imply a more expansionary monetary policy, since it apparently implies a lower average policy rate during the forecasting period. Continue reading

The Riksbank cannot maintain financial stability by debating

“Riksbanken kan inte upprätthålla finansiell stabilitet genom att debattera” (in Swedish), 2nd reply to Carl B. Hamilton on, the website of Dagens Industri. Also on Ekonomistas (in Swedish, with links).

Carl B. Hamilton seems to think that the Riksbank by op-eds, analyses and discussions in the new Financial Stability Council has sufficient instruments to affect financial stability to warrant financial stability as an objective. But the Council is only a forum for discussions and cannot make decisions. Since the Riksbank has no decision power over micro- and macroprudential instruments (that power is with Finansinspektionen, the Swedish FSA), the Riksbank cannot be accountable for financial stability and not have financial stability as an objective.   Continue reading

The household debt ratio fell in the first quarter of 2014 – now at the same level as in the fall of 2010

[English translation of new Economistas post (in Swedish).]

The household debt ratio – household debt as a percentage of disposable income – is an unsuitable risk measure and there are much better ones. In spite of this, the Riksbank and others attach large weight to how the debt ratio develops. For those who consider the debt ratio a relevant risk measure, it should be somewhat comforting that the debt ratio fell somewhat in the first quarter of 2014, in contrast to some alarmist warnings about rapidly increasing debt.  Continue reading