SPEECH DATE:  7 April 2017  SPEAKER:  Deputy Governor Henry Ohlsson  VENUE:  Swedish Trade Union Confederation, Stockholm  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergst org 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn @ riks ban k.se www.riksb ank.s e  The distributional effects of monetary policy “Price stability is a prerequisite for sustained economic growth as well as full employment and it prevents an arbitrary redistribution of income and wealth.” This is how the Riksbank concluded its press release on 15 January 1993, when the inflation target was announced. The link between monetary policy, growth and employment has been very much in focus over the almost 25 years that have passed since then. The distributional effects of monetary policy, on the other hand, have been more or less overlooked, until the question came into the spotlight again in recent years. When the Riksbank decided in early 1993 to begin steering its policy towards an inflation target, it was starting from a period when the major problem had been a high rate of inflation and also a rate of inflation that fluctuated substantially from one year to the next. Having a high inflation rate is as we know a problem i n itself, but it also becomes more difficult for households and companies to make financial decisions, as the real value of savings, investments and debt is affected by large fluctuations in inflation.
I believe that we can learn a lot about the impact of monetary policy on the economy by studying how monetary policy interacts with the distribution of income and wealth. Today I have focused primarily on the question of what distributional effects the expansionary monetary policy conducted by the Riksbank and other central banks  10 I have discussed the factors behind this downturn, what it means for households and companies and the  consequences for monetary policy in an earlier speech, see Ohlsson (2016). 11 [14]  may have had. The debate has so far mainly focused on the effect of rising asset prices. I have tried to nuance this picture and pointed out the importance of actually looking at the total effect of monetary policy on the economy, as well as using the correct point of comparison. My point can be summarised roughly as: without the expansionary monetary policy, growth and employment would have been lower and unemployment would have been higher. This would hardly have benefitted any group in society, and especially not those with the lowest incomes. Assessments of the distributional effects of the expansionary monetary policy should be regarded in the light of this. It is also important to note that no group would have benefitted from a decline in confidence in the inflation target. The whole idea behind the inflation target was that stable prices create good conditions for economic growth and high employment, as it was formulated in the Riksbank's press release in 1993.