Just as we have had to adapt to these changes, to fulfil our mission going forwards we need to look ahead to the structural shifts we face over the coming years and decades. That will mean hearing central bankers like me speak about things that we have not in the past – terms like central bank digital currencies, cyber risk, and climate change are now firmly part of our lexicon. This is not about us adding new things to our mission, nor is it about doing that which is rightly for others. It is about taking these new things into account alongside the old as we go about fulfilling our mission, delivering monetary and financial stability through time. Climate change Climate change is an obvious, and indeed urgent, example of this. The physical effects of climate change, such as rising sea levels and more frequent severe weather events, as well as the transition to a net-zero economy, through changes in government climate policy, technology and consumer preferences, create financial risks and economic consequences. The question is not if but where, to what extent, and how should we respond. Answering all three of those questions has been at the heart of our work on climate change over the past 6 years. Ignoring them is not an answer. Indeed the longer we wait, the greater the costs of adjustment.
But it is positive that their establishment on the labour market looks like it is starting to go faster. As you know, there are no guarantees in the forecasting business. It has taken a decade, but it seems as though the global economy has finally recovered enough from the after-shocks of the financial crisis to start a new chapter and that central banks in our part of the world will gradually be able to raise interest rates again. For the small Swedish economy, with its reliance on foreign trade, altogether premature or rapid rate rises would jeopardise the strong economy and development of inflation. For the Riksbank, it is a question of remaining vigilant. A prerequisite for inflation to continue to develop in line with the target is that economic activity remains strong and has an impact on price developments. Monetary policy therefore needs to remain expansionary for a while. But if everything goes as expected, the time to start normalising monetary policy will come closer. The assessment we made in February was that it is probably time to slowly start raising the repo rate during the second half of this year. But such a turnaround requires considerable caution, in my opinion. I occasionally hear somebody say that it feels wrong to have a negative policy rate when the economy is going as well as it is now. But the Riksdag has assigned the Riksbank to conduct a monetary policy that contributes to suitably low inflation.