Own interest rate forecasts When we expressed our views in February regarding the future development of the interest rate, it was the first time we presented our own assessment of the future repo rate path. By this we mean that we try to calculate what we believe will be a well balanced monetary policy over the coming years. Previously we presented forecasts for the economy on the basis of what the financial market participants believed about the repo rate. Now that we are presenting our own interest rate path it will be clearer both what we believe about the interest rate and what we believe about the economy in general. We consider this to be a major step forward in the Riksbank’s way of explaining how monetary policy functions. For most people I believe it is more important to have an idea of the development of the interest rate over time, rather than to know what an individual interest rate decision will entail. In this context I always try to be as clear as possible. The interest rate path is merely a forecast, not a promise. The economic conditions on which we base our forecasts are constantly changing. Changes are constantly taking place in the economy, which means that we have to reconsider our opinions of future developments. The interest rate path represents nothing more nor less than the best assessment we were able to make at the time it was published. When the world around us changes, we also have to change our forecasts.
It had responsibility for the CHAPS system, providing high-value, same-day settlement with a minimum value of £ (equivalent to around £ in today’s prices).5 Today there is no minimum value, but CHAPS settles around £ billion every working day, representing 93% of non-cash payments in the UK. Around 40% of CHAPS payments originate from organisations based overseas, reflecting the UK’s strong links to the global economy. Bringing CHAPS into the Bank When RTGS was established in 1996, it became the settlement infrastructure for CHAPS, increasing financial stability by ensuring the highest value payments were settled real time in central bank money. The CHAPS Co Clearing Company Ltd (CHAPS Co) continued to operate the CHAPS scheme from a member perspective until last year. Bringing CHAPS in-house marked an important milestone in our ongoing work to make CHAPS and RTGS safer, more secure, more accessible, and in line with international best practice. Until last year, the UK was unusual in that a private sector company (CHAPS Co) was responsible for the governance and rulebook6 of the high-value payment system, while the Bank provided the underlying settlement infrastructure. In 2017 the Bank’s analysis concluded that there were structural constraints in this model. Given the status of RTGS as critical national infrastructure, CHAPS Co could not be given the full range of information on RTGS that it would need to identify and manage risks across the whole payment system.