Profit before loan losses and net loan losses in the major banks (Four-quarter figures, SEK billion, 2006 prices) 100  80  60  40  20  jun-06  dec-06  jun-05  dec-05  jun-04  dec-04  jun-03  dec-03  jun-02  dec-02  jun-01  dec-01  jun-00  dec-00  jun-99  dec-99  jun-98  dec-98  jun-97  dec-97  jun-96  dec-96  jun-95  dec-95  jun-94  dec-94  jun-93  dec-93  jun-92  dec-92  jun-91  dec-91  dec-90  0  -20 Profit before loan losses  Profit before loan losses using IFRS  Loan losses  Sources: Bank reports and the Riksbank  2.
The hope is that monetary policy and the Riksbank’s arguments may contribute to reducing the risk of an overly rapid and far-reaching build-up of debt, and thereby also reduce the risk of a more abrupt adjustment of household indebtedness further ahead. It has sometimes been claimed that these considerations have meant that the Riksbank has given less priority to the inflation target and begun to regard house prices and household borrowing as target variables. This is not the case. The purpose of taking into account household indebtedness and house prices is to safeguard the inflation target and a stable development in the real economy, also in the longer term. These considerations could and should, in my opinion, be accommodated within the scope of the flexible inflation-targeting policy the Riksbank conducts, like many other central banks. The Riksbank is far from the only central bank to make this type of consideration. Household indebtedness and house prices have increased at an even faster rate in other countries, as I mentioned earlier. However, I consider that the question of house prices and household indebtedness has been given much more attention in the monetary policy debate than it actually deserves, considering the significance this question has for monetary policy decisions. In the media the interest rate increases have sometimes been linked directly to developments in the housing market. This is an incorrect picture.