In the long run, it is monetary policy that determine the rate of inflation in the economy and “rational” long-term inflation expectations should therefore still be in line with the central bank's target for price stability. If the public makes this presumption, the negative consequences of taking longer to attain the inflation target will be much less serious. 11 [20]  Concluding comments Let me round off. My purpose here has been to do two things. Firstly, I have tried to put the recent debate on monetary policy into perspective. I have discussed the criticism raised against our policy in general and against the negative repo rate in particular. As I hope I have made clear, there are some gaps in the criticism. I noted earlier that the main argument is often merely that monetary policy for various reasons is wrong. What I feel is often missing is a discussion of why the advantages of the inflation target should no longer apply and what the consequences would be if the Riksbank abandoned it. It is no new phenomenon that the debate fails to answer important questions. In the mid-1990s, when the inflation-targeting regime was relatively new, Lars E.O. Svensson, who was then scientific adviser to the Riksbank and later a member of the Executive Board, argued that the debate often lacked structure.
The criticism is rarely clear with regard to which of the statements it is based on, but my interpretation is that most of it is based on the first claim – that it is not so important to maintain confidence in the inflation target. Unfortunately, this rarely develops into any more detailed reasoning. Typically, the criticism tends to stop at monetary policy having been inappropriate, while reflections on the merits of a credible inflation target – and in particular on why the advantages of the current target should no longer apply – are almost always lacking. Essentially the criticism concerns whether or not to have an inflation target When thinking about it, this criticism is in fact quite remarkable. What it actually says is that even if confidence in the inflation target is beginning to fail quite clearly, the Riksbank should not do what it can to maintain it. In this sense, one can argue that the discussion is essentially about whether or not to have an inflation target, and perhaps even about whether or not to pursue an inflation-targeting policy at all, although it is rarely expressed in this way. I can only think of one earlier parallel. It was as long ago as the second half of 1994, after the Riksbank had decided to introduce an inflation target, but before it came into force in 1995.