13  Remarkably, an excessively low repo rate was something that Dagens Nyheter’s editorial pages warned against in December 2009, when Lars Svensson entered a reservation against holding the repo rate at 0.25 per cent and advocated cutting it to zero and they commented on his “input to the Executive Board of the Riksbank being reminiscent of a captain slavishly following his nautical chart, even when the ship hits an iceberg. It was one thing to cut the repo rate in an acute situation during the crisis to ward off a depression. But now that the economy has begun to recover, a zero interest rate would only add fuel to the housing price fire.” (See Wolodarski, 2009). 14  Of course, some measures were taken earlier, but the introduction of the framework must nevertheless be regarded as an important condition for being able to conduct macroprudential policy systematically. BIS central bankers’ speeches  5  Unfortunately, I believe one must accept that this cannot be quantified in a very precise way. I can only note for my own part that if I had not found the developments in household debt and on the housing market problematic, I would have advocated a somewhat more expansionary policy – but definitely not that the repo rate should remain at 0.25 ever since the crisis. But it is difficult to be more precise than this.
Sources: The National Institute of Economic Research and the Riksbank  14  BIS central bankers’ speeches  Figure 3 Price developments for houses and apartments Index: January 2005=100  Source: Valueguard  Figure 4 Lending to Swedish households Annual percentage change 14  14  12  12  10  10  8  8  6  6  4  4  2  2  0  0 06  07  08  09  10  11  12  13  14  Note. Refers to the MFIs’ lending to Swedish households including HIOs (households non-profit organisations), with a home as collateral, adjusted for reclassification and bought and sold loans. Source: Statistics Sweden  BIS central bankers’ speeches  15  Figure 5 GDP per capita and employment rate compared with pre-crisis figures Change in per cent 2007–2013 and 2008Q1–2014Q2 6 GER  6 JPN  2  GBR BEL  Employment rate  -2 ITA  NED NOR  FIN  -6  FRA EU  SUI AUT NZL SWE CAN AUS  2  USA  -6  -2  DEN POR  -10  -10  IRL -14  -14 ESP  -18  -18 GRE  -22  -22 -23  -18  -13  -8  GDP per capita  -3  2  7  Note. GDP per capita, annual data, constant 2005 USD (adjusted for purchasing power parity), 2007–2013; Employment rate, 15–64 years, 2008Q1–2014Q2. Seasonally-adjusted data.