We have  BIS Review 115/2008  3  experienced many years of extremely good economic growth and low inflation. Now we must be prepared for high inflation, higher interest rates and lower employment possibly leading to a deterioration of the finances of many Swedish households over a couple of years. Monetary policy often comes into focus in this type of situation. The recent debate – is the Riksbank chasing inflation spectres? The Riksbank’s interest rate increases have been much discussed recently. It has been said that the Bank is chasing a non-existent inflation spectre, that the inflation target should be scrapped or reformulated, and that the Riksbank should take more notice of economic activity than inflation. To begin with, inflation is a real problem for many households. Inflation means that everyone gets less for their money. Oil, electricity and food prices have risen substantially. These goods are an important part of household consumption. Together food and energy comprise approximately one quarter of the CPI. The fact that, for instance, oil and food prices have risen so much here in Sweden is largely because these goods have become more expensive in the world market. Should the inflation target be reformulated? Some of the recent criticism has concerned whether the inflation target should apply to some other measure than the CPI. The idea is that monetary policy should stabilise around a measure of inflation that excludes import prices. The Riksbank is in any case unable to affect prices in the world market.
The Fund has invested considerable efforts in promoting transparency and developing standards and codes in cooperation with the World Bank, the Bank for International Settlements and other organizations. Remarkable progress has been made in this area but we realize that broad implementation of these standards will take time, although this is time well spent as improved practices and comparability will increase the stability of the international financial system. We believe that the next steps should be to harmonize accounting standards at world level. The Nordic-Baltic Constituency encourages all member countries to support the efforts of the International Accounting Standards Board to reach a consensus on accounting standards and principles. Furthermore, we welcome the new steps taken to increase the Fund’s transparency, especially the policy of moving to presumptive publication of all Article IV reports and the required publication of documents in exceptional access cases. Promoting Economic Progress among Low-Income Countries One of the greatest challenges of our time is to win ground in the battle against poverty. All parties must be fully engaged in this campaign. Many initiatives in recent years have borne fruit but there is still a long way to go and the international community must do better in order to achieve the Millennium Development Goals (MDGs). Here, I would like to focus on trade and its importance for development.