Lars Nyberg: The Riksbank's monetary policy strategy Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at the Foreign Banker’s Association, Stockholm, 14 September 2006. *  *  *  Introduction Let me begin by thanking you for the invitation. It is a pleasure to be able to come here and talk about the Riksbank and our monetary policy. When conducting modern monetary policy, it is important that the principles guiding interest rate decisions are known to all. Monetary policy largely has an effect through its influence on expectations of future inflation and interest rates. Therefore, we regularly describe our views on economic developments in our Inflation Reports and publish the minutes of our monetary policy meetings to enable everyone to understand the considerations we make. In addition, twice a year the Governor of the Riksbank holds a public speech for the Riksdag (the Swedish Parliament) Committee on Finance and responds to questions from members of parliament and journalists. Moreover, we Executive Board members hold a large number of speeches, in which we discuss various aspects of the Swedish economy and explain our interest rate decisions. I should say that a continuous debate on monetary policy and its terms is a necessary condition for the policy to function satisfactorily. One difficulty with monetary policy is that it does not have an immediate impact. It is therefore necessary to base monetary policy decisions on forecasts of future inflation and developments in the real economy.
Our assessment throughout the year has been that the outlook for inflation and the economy over the coming years indicates that it is reasonable to assume the repo rate will need to be gradually increased. In accordance with this view, we have raised the repo rate four times so far this year and my assessment is that the repo rate will need to be raised further in future. However, as I mentioned earlier, we both can and should change our assessment if the economy develops in a manner we had not expected. Thank you! BIS Review 84/2006  5