5 A number of analysts have also speculated that the Riksbank sees the zero level as so important in itself that it would be wary of lowering the repo rate over the coming years even if the economic outlook and inflation prospects were to deteriorate. My view is that, as a result of this, there may be a risk of several people starting to make the interpretation that we have indeed taken our eye off the ball to a certain extent, or at least don’t have it as sharply in focus as we usually have. Too low average inflation creates problems Let me elaborate a bit on this. If the repo rate were to be raised as soon as around the turn of the year, the serious aspect is not in itself that the interest rate would then be 0.25 percentage points higher, although for someone who prefers an unchanged rate, there is of course no advantage in this either. The problem is instead that it might be perceived as the Riksbank deviating from what it normally Gordon, Skolimowski and Stirling (2019), and Milne (2019). An alternative view is that the Riksbank has simply become difficult to interpret, see, for example, Boije (2019). 5  3 [17]  does: designing monetary policy so that it is always very clear that the inflation target is the point of departure. This is of course particularly important in situations where there is a risk of confidence in the inflation target starting to evaporate.
So there are sound economic arguments for an inflation target that is not lower than 2 per cent. To sum up, it is these considerations I have in my mind when I talk about the importance of keeping our eye on the ball. Basically, it is a question of constantly being very clear about the guiding role of the inflation target in the design of monetary policy. The lower bound of the repo rate is less than zero Regarding negative interest rates, I presented my own view on the matter in a speech around this time last year. 6 I think that the difficulties with negative rates are not so much a question of purely economic aspects, but rather of what is feasible according to social conventions and possible to create understanding for. For example, the biggest problem is probably not the one that is commonly highlighted, namely that the general public would choose to empty their bank accounts and only hold cash, as soon as the interest rate is negative. Holding savings in cash is, when it comes down to it, both troublesome and costly and given that most people in Sweden have started to abandon cash, it is not something that would seem particularly natural. The pain threshold here is probably relatively high, from a purely economic perspective.