These institutions have better information on their own economies, greater resources for analysis and investigation and, above all, better information regarding their own plans. In my opinion, one must have strong and clear reasons for arriving at another conclusion than that stated and signalled by these central banks themselves. The statements and signals from the Federal Reserve are hardly compatible with a forecast that they will begin raising their policy rate in 2011. Here I refer for instance to Ben Bernanke’s recent speech (2010) and to the most recent decision by the FOMC on a new round of Quantitative Easing (QE2), which means that the Federal Reserve will buy government bonds regularly up to summer 2011 for the purpose of lowering long-term interest rates in the United States. As regards the ECB, in my opinion the best information and signals are those presented in the ECB Staff Forecast (2010) at the beginning of September. The forecast is based on an assumption that the Eonia interest rate, the overnight rate in the eurozone, will follow market expectations. The forecast shows that inflation will be below the ECB’s target of “below, but close to, 2 per cent” and that the real economy will be weak. If anything, it indicates that the ECB will follow a policy rate path that is lower than market expectations.
If we assume that equilibrium unemployment is as high as 6.5 per cent in Sweden, the unemployment gap is about the same as in the eurozone and the United Kingdom. These level figures showing GDP and unemployment undoubtedly provide a more nuanced picture of the Swedish economy and the level of resource utilisation than merely looking at GDP growth. Given these figures, we can wonder what justification there is for tightening monetary policy in Sweden when the central banks in the other three countries are still conducting very expansionary policies. In the United States, Federal Reserve Chairman Ben Bernanke (2010) recently held a muchpublicised speech, in which he observed that the forecast for inflation was too low and the forecast for unemployment too high, in relation to the levels compatible with the Federal Reserve’s mandate. He therefore drew the following conclusion: “given the Committee’s  5  In Figure 2 the unemployment gap, which is the difference between the unemployment rate and equilibrium unemployment rate, is used to measure resource utilisation. I consider the unemployment gap to be a more robust, transparent and less easily manipulated indicator of resource utilisation than the alternatives. Moreover, until new and better estimates are made, I consider equilibrium unemployment to be around 5.5 per cent. I gave more detailed motives for this at the most recent monetary policy meeting (Sveriges Riksbank 2010c). It is also easy to do sensitivity analysis with different assumptions about the equilibrium unemployment rate.