However, inflation has run persistently well below the central bank’s 2 percent inflation target. Given the relative openness of Sweden’s economy, moving the inflation rate back up to target has been greatly complicated by the sensitivity of Sweden’s exchange rate and financial conditions to developments in the euro area, where domestic economic conditions are consistent with much more accommodative policy.
The ECB, as an institution at the frontier of European integration, has played an active role in addressing the crisis. The credibility of the ECB’s steadfast commitment to its primary objective is unshaken in the eyes of both the markets and the people of Europe.