In such a hypothetical case, we would thus not “give up the inflation target” and suddenly start conducting an entirely different policy and, for example, raise the interest rate. There would still be reason to conduct a policy that is as expansionary as we deem possible, to avoid taking longer than necessary to attain the target. However, one consequence might be that the Riksbank’s communication becomes even more central. The damage in a situation where monetary policy is not made more expansionary, despite inflation being expected to undershoot the target for a long time, will be much less if the general public can be convinced that the target has not been abandoned, but that it is merely a question of taking longer than normal to attain it. Clarifying this would be a difficult but hopefully not impossible task. Often unclear whether the criticism applies to monetary policy or the target Having gone through how I view the current situation and discussed a few related aspects, I would now like to widen the perspective a little and talk about more fundamental issues. More specifically, I thought I would go into why we have the framework we have, with an inflation target and a floating exchange rate, and what benefits this system provides. This is not the first time I have done so, but I  8 Jansson (2016). 6 [17]  believe it is useful and important to remind people of this now and then.
This could in turn create imbalances on the labour market. Many analysts argue that, instead of the most important aim of 10 [17]  wage formation being to safeguard the international competitiveness of industry, it should be to achieve balance in the labour market as a whole. 10 Another important aspect highlighted in the discussion is the extent to which this wage standardisation is always compatible with an inflation-targeting regime. The reason for highlighting this issue is the strikingly low overall nominal wage growth in the economy despite a healthy economic situation and more or less on-target inflation. That wage agreements in Swedish industry have been restrained is due to a large extent to modest wage growth in our European competitor countries, probably because many of these countries have been hit very hard by the international financial crisis and subsequent European debt crisis. As the agreements in industry also set the standard for wage agreements in other sectors that are only partly or not at all exposed to competition, these agreements will also be low. From a theoretical perspective, this type of wage standardisation should not be incompatible with inflation targeting in the long term as the euro area’s inflation target is very much in line with Sweden’s. But in periods when wage growth in the euro area is unusually low, standardisation based on the industrial sector contributes to low wage growth in the Swedish economy as well.