This symmetry means that both negative and positive deviations from the target are equally undesirable. The ECB too points out that the marked decline in the equilibrium real interest rate has meant that the effective lower bound for nominal interest rates is likely to limit monetary policy more often. It also emphasises that one consequence of this is that strong or sustained monetary policy measures are needed when the interest rate is close to the lower bound to avoid negative deviations from the inflation target becoming permanent. It also notes that the new strategy may mean that inflation periodically will be above the target, but, unlike the Federal Reserve, it has chosen not to introduce an average target.7  Mutual dependence We have thus seen that a prerequisite for fiscal policy and monetary policy to be effective is that they have a stable long-term foundation. For fiscal policy, there must be confidence that public debt is stable over the long term and, for monetary policy, there must be confidence that the central bank can keep inflation low and stable. In order for monetary policy to be able to use the policy rate to counteract economic downturns and increased unemployment, it is also necessary for average inflation not to be too low.
13 [17]  References Auclert, Adrien, Hannes Malmberg, Frederic Mertenet and Matthew Rognlie (2021), “Demographics, wealth, and global imbalances in the twenty-first century”, NBER Working Paper 29161. Blanchard, Olivier (2019), “Public Debt and Low Interest Rates”, American Economic Review 109(4), pp. 1197–1229. Calmfors, Lars (2021), “Det är kanske dags att ompröva det finanspolitiska ramverket” [It may be time to review the fiscal policy framework], article in Dagens Nyheter, 21 October (in Swedish). ECB (2021), “The ECB’s monetary policy strategy statement”, https://www.ecb.europa.eu/home/search/review/html/ecb.strategyreview_monpol_strategy_statement.en.html Economic Commission (1993), Nya villkor för ekonomi och politik [New conditions for the economy and politics], Economic Commission’s proposal, SOU 1993:16 (in Swedish). Government (1997), Government Bill 1996/97:150, 1997 Spring Bill (in Swedish). Government (2021), Statement of Government Policy, 30 November. Jansson, Per (2019), “Considerations of an interest rate dove and an inflation hawk”, speech at Danske Bank, 3 December. Jansson, Per (2020), “Thoughts on the need for changes to inflation targeting”, speech at Handelsbanken, 16 December. Lane, Philip R. (2021), “The future of the EU fiscal governance framework: a macroeconomic perspective”, address at the European Commission’s webinar on “The future of the EU fiscal governance framework”, 12 November. Lagerwall, Björn (2019), “Fiscal policy in a monetary policy perspective”, Economic Commentaries No. 5, 2019, Sveriges Riksbank. Leeper, Eric M. (2018), “Sweden’s fiscal framework and monetary policy”, Economic Review 2018:2, Sveriges Riksbank.