It is one thing to note that such revisions have affected the historical development of the krona. It is quite another to forecast such revisions and to allow this to influence the forecast for the krona. In my view, the assessment of interest rates abroad on which the analysis in the latest Monetary Policy Update was based was largely in line with market expectations. This means that my view of the future development of the krona in December was based on the assumption that the market would not significantly revise its view of interest rates abroad. Housing prices and household indebtedness may lead to financial imbalances Another important but difficult-to-assess factor that we as monetary policy decision-makers have to take a stance on is the rapid increase in housing prices and household indebtedness that we have observed for some time now. I am among those who are somewhat concerned about this situation. The debate on the role of housing prices in monetary policy has been slightly unclear. As I see it, it is not a question of steering housing prices or other asset prices towards a set target. Nor is it a question of trying to puncture a price bubble by means of drastic repo rate increases. Nor do we assess that financial stability is threatened by the build-up of household debt. This can be seen, for example, if you read our latest Financial Stability Report, which was published in December.
For example, an unfavourable scenario in which a burst asset bubble leads to a deflationary situation that is hard to overcome will be assigned greater importance than a high-inflation scenario. Experience from Japan in the 1990s illustrates this. Assessments of this type must be taken into account in the monetary policy decision. The moral of the story is that monetary policy cannot be reduced to a mechanical reading exercise. However well-prepared the material on which monetary policy decisions are based, there will always be complex and important aspects that policymakers must take a stance on. It is important that these aspects are discussed from several different perspectives. This is one reason why we have an Executive Board made up of economists with different backgrounds and expertise. It is beneficial and important for us to conduct a wide-ranging debate on monetary policy at the Riksbank and not just externally. I believe that it leads to better monetary policy decisions. 10  BIS central bankers’ speeches