One obvious reason for this is that macroprudential policy is not yet in place in many countries and where there is a macroprudential policy, it has often not yet been put into practice – it is quite simply too new and untested.25 The policy rate is thus as yet one of few instruments available for practical use. 22  See, for example, Nyberg (2005), Ingves (2007) and Heikensten (2008). 23  See, for example, Mishkin (2007) and Cagliarini, Kent and Stevens (2010). 24  See, for example, the Committee on International Economic Policy and Reform (2011) and Mishkin (2011). 25  Woodford (2012), who develops a theoretical model for how financial stability considerations can be incorporated into inflation targeting, notes for instance: ”[I]t cannot be claimed that such tools already exist and  10  BIS central bankers’ speeches  But there is also an international discussion on whether the policy rate will have a role to play even when macroprudential policy is in place.26 One reason is that it may very well prove difficult to design a system for macroprudential policy that functions sufficiently well and which inventive market participants are unable to circumvent. The policy rate is a blunt instrument, as it has a broad impact on the economy. But at the same time, this may be a strength compared with macroprudential tools, simply because it is difficult to "circumvent" a policy rate increase.
The inflation expectations are taken from Prospera's survey of market participants Sources: Statistics Sweden and TNS SIFO Prospera  BIS central bankers’ speeches  15  Figure 3. GDP growth Annual percentage change, seasonally-adjusted data 10  10  GDP GDP 1995Mean 2.7  Mean  8  8  6  6  4  4  2  2  0  0  -2  -2 GDP 1971-1994 Mean 1.8  -4  -4  -6  -6  -8  -8 70  75  80  85  90  95  00  05  10  Source: Statistics Sweden  Figure 4. CPI and CPIF Annual percentage change 5  5  CPIF Mean CPI Mean  4  4 CPIF 1995-2012 Mean 1.80  3  3  2  2  1  1  0  0  CPI 1995-2012 Mean 1.44  -1  -1  -2  -2 95  97  99  01  03  05  07  09  11  13  Note: Monthly real-time data, January 1995 – April 2013. Sources: Statistics Sweden and the Riksbank  16  BIS central bankers’ speeches  Figure 5.