Thanks to the reforms in the 1990s, it is now easier than it was 30 years ago to deal with high inflation. Firstly, monetary policy now has a different mandate and a constitutional independence that enables us to act decisively to counteract high inflation. Still, the monetary policy assessments are not easy. The high level of indebtedness is likely to mean that interest rate sensitivity in the economy is greater than before, and different – public finances are less affected, but households and companies are more affected. This composition makes it likely that a given interest rate increase will have a greater effect on demand and thus on inflation. Secondly, the period of inflation targeting has led to long-term inflation expectations now being much better anchored. In the early 1990s, high inflation had been  13 [16]  built into the expectations of economic agents in a completely different way. If prices and wages rose too much in relation to the rest of the world, it was expected that problems with cost crises and rising unemployment would be solved by writing down the value of the krona, that is, through devaluation. Thirdly, strong public finances are now a major advantage. This has increased the market's confidence in Sweden’s ability to keep public finances in order and fiscal policy is not feared in the same way as in the 1970s and 1980s to be a contributing factor in itself to sustained high inflation.
But it was now nevertheless clear that it was a total renovation that was needed. 4 [16]  In the Swedish paper Dagens Nyheter on 20 November – the day after the defence of the fixed exchange rate was abandoned – it was announced that an expert group had been appointed with Professor Assar Lindbeck as chairman. The aim was to tackle the long-term economic problems and, in Assar's words, to try to answer the question: “What is it about the Swedish economy that makes it run out of control like this?”6 The group, which came to be called the Lindbeck Commission, was to present proposals for how to tackle problems, which Assar described as “the low growth rate, the exploding public expenditure, the budget deficits, the constant trends towards cost inflation and the slow productivity growth”. Necessary changes in the framework… Unfortunately, it often seems that a crisis is needed to bring about real and profound changes. The major changes in the economic policy frameworks that we made as a result of the crisis in the early 1990s are well known so I will only mention them briefly here. The inflation target Instead of defending a fixed exchange rate, the task of monetary policy from now on would be to keep inflation low and stable. In January 1993, the Riksbank announced that an inflation target of 2 per cent would enter into force with effect from 1 January 1995. Gradually, changes in the monetary policy framework confirmed the new order.