“Should Monetary Policy Take Financial-Stability Considerations into Account at the ELB?”, panel presentation (slides) at the First ECB Annual Research Conference, “Monetary Policy and Financial Stability in a Low Interest Rate Environment,” Frankfurt, September 28-29, 2016.
Discussion (slides) of Gelain, Lansing, and Natvik: “Leaning against the credit cycle,” Swiss National Bank Research Conference “New Perspectives on the role, instruments and effects of monetary policy,” Zurich, September 23-24, 2016.
Discussion (text, slides) of Kocherlakota, “Rules versus Discretion: A Reconsideration,” Brookings Papers on Economic Activity, Fall 2016 Conference, Washington, DC, September 15-16, 2016.
Keynote presentation at the Norges Bank Conference “Rethinking Inflation Targeting,” Oslo, September 8-9, 2016. Slides. Paper.
“The Recent Swedish Experience of Monetary Policy and Macroprudential Policy,” slides presented at Riksrevisionen (The Swedish National Audit Institution), Stockholm, August 30, 2016.
“Monetary Policy, Financial Stability, and Life at the IMF,” interview in IMF Research Bulletin, June 2016.
Discussion (slides) of Filardo and Rungcharoenkitkul, “Quantitative case for leaning-against-the-wind,” CCBS Research Forum on Macro Finance, Bank of England, London, May 26-27, 2016.
Interview in Svenska Dagbladet, May 23, 2016 (in Swedish)
FOMC April 26-27 minutes on the relationship between monetary policy and financial stability (pp. 2-3):
Most participants judged that the benefits of using monetary policy to address threats to financial stability would typically be outweighed by the costs associated with deviations from the Committee’s employment and price-stability objectives induced by such actions; some also noted that the benefits are highly uncertain.
“The Recent Swedish Experience of Monetary Policy and Macroprudential Policy,” slides presented at Finansbolagens informationsmöte, Grand Hotel, Stockholm, May 20, 2016.
Substantially revised and updated on May 15, 2016.
On Thursday, May 12, the Finance Committee of the Riksdag had a hearing on the review by Marvin Goodfriend and Mervyn King of Swedish monetary policy. I had the opportunity of asking some questions at the hearing. They were: Continue reading
“Promoting Financial Stability: The Roles of Macroprudential and Monetary Measures,” slides for panel presentation at the BoC-CIGI-IMF-PIEE Workshop on “Re-inventing the Role of Central Banks in Financial Stability,” Ottawa, May 5-6, 2016.
“The Rationale for Macroprudential Policy,” slides for opening speech at the First Annual ECB Macroprudential Policy and Research Conference, April 26-27, 2016.
Background paper 1. “Monetary policy and macroprudential policy: Different and separate.”
Background paper 2. “Cost-Benefit Analysis of Leaning Against the Wind : Are Costs Larger Also with Less Effective Macroprudential Policy?“
Remissvar på Goodfriend och Kings utvärdering av Riksbankens penningpolitik (English summary)
Jag instämmer i utredarnas kritik att Riksbanksmajoriteten med en problematisk strategi fört en för stram penningpolitik efter 2011 och medvetet ha utnyttjat överoptimistiska inflationsprognoser för att motivera en högre ränta. Jag avvisar utredarnas påstående att majoritetens stora penningpolitiska åtstramning 2010-2011 skulle varit rimlig i ljuset av tillgänglig information och återhämtningen efter krisen. Jag avvisar också utredarnas påstående att minoriteten i det stora hela skulle ha godtagit åtstramningen, eftersom den vid varje möte röstade för en måttligt lägre ränta och räntebana. Minoriteten följde en enkel och robust handlingsregel. Enligt denna skulle ränta och räntebana sänkas ett steg vid varje möte så länge som inflationsprognosen låg under målet och arbetslöshetsprognosen låg över arbetslöshetens långsiktigt hållbara nivå. Detta framkommer tydligt i protokoll och tal. Minoritetens lägre ränta och räntebana var således bara det första steget, inte det enda steget, mot en väl avvägd penningpolitik. Utredarnas rekommendationer kommenteras utförligt i mitt remissvar, men jag ser inte att deras rekommendationer skulle lösa problemen med den svenska penningpolitiken. För att lösa problemen bör Finansutskottet förtydliga Riksbankens i Riksbankslagen och dess förarbeten formulerade mandat till att vara prisstabilitet och full sysselsättning, stärka den demokratiska kontrollen av Riksbanken samt ytterligare klargöra Sveriges genomtänkta ansvarsfördelning för makrotillsyn. Continue reading
Consultation response (in Swedish) (Swedish summary)
I agree with Goodfriend and King’s criticism that the Riksbank majority, because of concerns about household debt, pursued too tight monetary policy after 2011 and deliberately used over-optimistic inflation forecasts to justify a higher policy rate. I reject Goodfriend and King’s claim that the majority’s large monetary tightening 2010-2011 was justified in the light of available information and the recovery after the crisis. I also reject Goodfriend and King’s claim that the tightening 2010-2011 was broadly accepted by the minority (Karolina Ekholm and me), because we at each policy meeting only voted for a moderately lower policy interest rate and policy-rate path.The minority followed a simple and robust policy rule. According to this, the policy rate and policy-rate path should be lowered one step at each meeting, as long as the inflation forecast was below the target and the unemployment forecast was above the long-run sustainable unemployment rate. This is clear from the minutes and speeches. The minority’s lower policy rate and policy-rate path at each policy meeting was thus just the first step, not the only step towards a well-balanced monetary policy. Goodfriend and King’s recommendations are commented in more detail in my consultation response, but I do not see that their recommendations would solve the problems with Swedish monetary policy. In order to solve the problems the Finance Committee should clarify that the Riksbank’s mandate, as formulated in the Riksbank Act and its preparatory works, is price stability and full employment. The Finance Committee should also strengthen the democratic control of the Riksbank and further clarify assignment of responsibilities in the current well thought-out framework for macroprudential policy. Continue reading