They usually refer to the financial crisis and developments in other countries as a warning example of how badly things can go if one allows debt to build up and housing prices to rise. They then express concern for Swedish household sector debt and say – without mentioning the research that has shown that monetary policy has very little effect on housing prices and debt – that a higher repo rate is necessary to prevent developments similar to those in the countries that were hit hardest in the financial crisis. Sometimes one adds an argument that basically states that even if we cannot see any immediate threats in Sweden at present, this does not mean that they do not exist. In many of the countries where things have gone very badly, people did not see the risks, they say, so not seeing a risk doesn’t mean there isn’t one – a variation of the argument that “this time is (not) different”.12 Let me emphasise that I certainly do not mean that risks linked to high indebtedness should be ignored. In the light of events in recent years I find it difficult to imagine that anyone would fail to agree that governments, legislators and financial supervisory authorities should do everything in their power to prevent and limit the consequences of future crises. But I nevertheless feel that the argument that household debt entails major risks and needs to be addressed must be substantiated in a sufficiently convincing manner.
Many people have recently criticised the Riksbank’s communication for being unclear, with some claiming that it has sometimes been difficult to understand exactly why some decisions have been taken and why they have been judged to be better than the alternatives.1 What I intend to do here today is to provide my view of where the main divisions are and to describe how I came to the conclusions that I hold. I believe and hope that this review of the arguments can straighten out some potential questions and that it will form a good basis for continued discussions. Differences in views regarding monetary policy and what it can achieve Let me start by pointing out that lack of agreement among a monetary policy committee is not a problem in itself. The actual purpose of having a group of individuals decide on monetary policy is to create the right conditions for better decisions; it is namely so that groups tend to make better decisions than individual decision-makers. This is partly because the members’ experiences and skills are pooled and partly because the group acts as an insurance against the particular preferences of one individual being able to govern monetary policy; it means there are ”checks and balances”. The fact that different members make slightly different assessments and reach different conclusions is thus not so remarkable.