Recently, a number of global shocks − the coronavirus pandemic, Russia's invasion of Ukraine1 and lock-downs in China − have contributed to pushing up inflation in Sweden and around the world, to levels we have not seen since the early 1990s. I think it is of the utmost importance that we defend the inflation target as anchor for price setting and wage formation in Sweden. Inflation is too high. It is painfully high for both households and companies.2 In addition to worrying about rising prices, households and companies are worried about higher interest rates. Will we go from 500 per cent to −0.5 per cent to –  *I would like to thank Mikael Apel for his work on this speech, Johan Almenberg, Emma Bylund, Charlotta Edler,  Petra Frid, Stefan Ingves, Jens Iversen, Ann-Leena Mikiver, Emelie Nilsson and Marianne Sterner for their valuable comments, Elizabeth Nilsson for translation into English and Daniel Höffker and Josefin Poellinger Östberg for data from the Riksbank's archives. I would also like to thank my upper-secondary school teachers at Platenskolan in Motala for their solid education and for always showing their pupils respect and trust. 1 See, for example, Ohlsson (2022) for a review of how war has affected inflation in the 20th century. 2 Inflation also has a varying impact on different types of households and companies; see Breman (2022) for a more detailed discussion. 1 [16]  well, what comes next?
In a final attempt to stop the currency outflow, the Riksbank first raised its policy rate to 75 per cent again on 16 September 1992 and then, at 15:20 on the same day, to 500 per cent. At the same time, the pound sterling and the Italian lira left the ERM and were allowed to float freely. In this situation, the government and the opposition managed to agree on a crisis package that was presented on 20 September, intended to strengthen the state budget by SEK 40-45 billion. The Riksbank then cut the rate to 50 per cent. After a second crisis package at the end of the month, the interest rate could be cut further, to 24 per cent. This calmed the market somewhat and the Riksbank was able to gradually lower the marginal rate to 11.5 percent in the late autumn. However, the calm was only temporary. In mid-November, the outflow of foreign currency began to accelerate again. Repeating the same manoeuvre with a substantial rate increase and further crisis packages was considered pointless – confidence had been exhausted. On 19 November 1992, the Riksbank abandoned the fixed exchange rate. When you go through the press cuttings from this period, it is not very difficult to see an image of how we were desperately using rate increases and hastily concocted fiscal policy agreements in an attempt to patch up and repair a house that was really so run down that it needed to be completely renovated.