15  For a description of Ramses, see Adolfson et al. (2013). 16  A corresponding analysis of the expected consequences of holding the repo rate unchanged at 0.25 per cent since July 2010 is presented in Svensson (2013b). According to this analysis, CPIF inflation would have been around one percentage point higher than it actually was at the beginning of 2013. BIS central bankers’ speeches  9  Figure 5. Alternative scenario for CPIF inflation and unemployment Annual percentage change and percentage of labour force, seasonally-adjusted data 3  9  CPIF, lower repo rate 2013, (left scale) CPIF, main scenario, (left scale) Unemployment, lower repo rate 2013, (right scale) Unemployment, main scenario, (right scale)  2  8  1  7  0  6 12  13  14  15  16  17  Note. The experiment with a lower repo rate in 2013 assumes a repo rate cut from 1 per cent to 0.75 per cent at the monetary policy meeting in February 2013 and a repo-rate path that from December 2013 follows the path published in December 2013 and again in February 2014. Sources: Statistics Sweden and the Riksbank  The analysis can also be applied to unemployment. We see then that a repo rate 0.25 percentage points lower would have entailed somewhat lower unemployment now. The effect on unemployment is a clear economic cost of a monetary policy that leans against the wind.
Unemployment has been close to a low historical average. Although it is of course difficult to compare and assess different central banks’ deliberations, the repo-rate decisions in Sweden during most of 2013 would appear to be one of the clearest examples of a monetary policy that leaned against the wind. When the prospects for inflation fell, the repo rate was held unchanged with explicit reference to household debt. This makes it interesting both for us in Sweden and for central banks in other countries to assess how successful the policy has been. It is far too early to make a complete assessment. But as there is a substantial need to manage financial imbalances in some countries, and there is a discussion on the role of monetary policy in this context, it may nevertheless be useful to make a preliminary assessment of the policy. Swedish inflation moving further from the target CPIF inflation was around 2 per cent in 2010, when the increases in the repo rate began after the record-high cuts in connection with the global financial crisis. But since then inflation has fallen and CPIF inflation has been around 1 per cent for a couple of years. Last autumn, inflation fell further. It is now very low; in February CPI inflation was –0.2 per cent and CPIF inflation was +0.4 per cent.