In such a situation it was natural to study the form of the economic recovery following previous crises. The overriding conclusion that could then be drawn was that the recovery would be slower than normal.6 However, it is also the case that every crisis is unique in many respects and there were circumstances that pointed in the opposite direction. Among other things, the emerging economies in Asia, led by China, recovered relatively quickly and became something of a driving force for the recovery in the rest of the world. Another positive factor was that growth was rather good around the world when the crisis began.7 With hindsight, it can be noted that the recovery in many areas, and not least in Sweden (see Figure 1 above), has been much more rapid than we could have expected. As can be seen in Figure 2, the Riksbank began to increase the repo rate somewhat earlier than predicted during the most severe phase of the crisis and the repo-rate path was given a somewhat more “top heavy” profile. It is natural to try to learn from previous crises, but at the same time we must be careful not to draw too far-reaching historical parallels. In the midst of the crisis there was, for example, sometimes a slightly careless tendency to refer to the Swedish crisis of the 1990s, despite the fact that the circumstances at that time were entirely different.
Monetary policy is based on forecasts The Riksbank also uses forecasts to “plan” monetary policy. This planning is reflected in our repo-rate path and if developments take a different turn than forecast then we have to adjust the repo-rate path. It may seem that the Riksbank uses forecasts in roughly the same way as other players whose operations are also affected by the development of economic activity. There is, however, an important difference. The Riksbank can, in contrast to most other forecasters, affect the forecasts. This is the whole point of monetary policy. Put simply, we can say that a well-balanced monetary policy is characterised by the forecast for inflation being close to the inflation target and the forecast for resource utilisation being close to its normal level.1 There is nothing to say that we have to publish our forecasts. Life would in some respects be easier if we did not publish them. We would avoid the criticism we are subjected to when our forecasts prove to be wrong and we would be able to write in more general terms about economic developments without needing to present a detailed and cohesive forecast. For a long time, central banks were rather closed and secretive bodies and when, for example, the Riksbank began publishing its inflation forecasts in 1997 there were many people, not least in the world of central banking, who had misgivings; wouldn’t confidence be eroded if the forecasts turned out to be wrong?