The reason is that it has proved difficult in practice to lower nominal wages. If inflation is low and nominal wages cannot be lowered, then it becomes difficult to adjust real wages between different professions, companies and sectors. This can ultimately lead to both higher unemployment and poorer productivity growth in the economy. A moderate level of inflation mitigates these problems. It functions as grease in the wheels of the economic machinery. Another advantage with an inflation target of 2 per cent, which has come to the fore in recent years, is that it creates at least some scope for lowering the policy rate before it reaches its lower bound. If the inflation target, and hence average  4 [17]  inflation, were to be lower, then the nominal rate would also on average be lower. This would be particularly problematic in a world where real interest rates are very low, as is currently the case. The scope for lowering the rate before it reaches its lower bound would then be more limited than it is today, which would make it more difficult to counteract future recessions. Therefore, if one does not like negative interest rates, one should not advocate a lower inflation target, as that would imply that the policy rate would have to be negative for longer periods. In the international debate, moreover, there are several economists who think that not even an inflation target of 2 per cent provides sufficient scope to conduct as expansive a monetary policy as is sometimes necessary.
But if there is a perception starting to spread that the inflation target is irrelevant and should be scrapped, we have, given our mandate, an obligation to bring this up to discussion and point out that we consider it to be a problem. When it comes  10 See, for instance, Calmfors (2018) and Calmfors et al. (2019). It should be pointed out that there are studies indicating a certain amount of wage flexibility with regard to changes in unemployment at a regional level, see Carlsson et al. (2019). 11 [17]  down to it, Sweden is not the only country with an inflation target of 2 per cent and an industrial sector exposed to international competition. Important to have perspectives on the krona development Let me now go over to the other area I wish to delve deeper into; the exchange rate and development of the krona. When Sweden introduced an inflation target in 1993, we chose an exchange-rate regime at the same time. As I just pointed out, a fixed exchange rate and an inflation target with a floating exchange rate are two different ways of trying to provide the economy with a nominal anchor, that is, a benchmark for price-setting and wage formation. An inflation target tries to steer expectations in the economy directly, while a fixed exchange rate tries to steer them indirectly, by virtue of it becoming more costly if price increases and wage growth are higher than abroad.