A lower repo rate now and faster increases in the coming period seems to me a better monetary policy, when weighing the risks against the opportunity to return to the inflation target sooner and to have a more balanced resource utilisation (see Figure 7).10 The assessments and calculations I refer to here are based on the general framework presented in our Monetary Policy Report published in July.11 It is not entirely clear how this reasoning should be translated into recommendations for practical monetary policy. We are working on this issue within the bank. It scarcely needs to be said that the assessments and calculations I have implied today are uncertain, and that they will remain uncertain even when work on these issues has progressed further.12 Further measures are needed to strengthen financial stability In conclusion, I would like to discuss how the new framework for macroprudential policy affects my view of how monetary policy should be conducted. It is good that one single authority, Finansinspektionen (the Swedish Financial Supervisory Authority), is given a clear responsibility for decisions on supervisory measures. In this way, we avoid the problem that different authorities may try to put responsibility on others, which could have arisen if the responsibility was shared between several authorities. At the same time, it is positive that several authorities, including the Riksbank, are given a role to play in the work on macroprudential policy through the new financial stability council.
Firstly, a lower repo rate would mean that CPIF inflation returns to 2 per cent even faster and that resource utilisation is more balanced than in our forecasts (see Figure 7). Figure 7 More expansionary monetary policy Effects according to the Riksbank’s macro model Ramses Repo rate  4  4  3  CPIF  3  3  3  2  2  1  1  0  0 12  13  14  15  16  Unemployment  9  2  2  1  1  0  0 12  13  14  15  16  Real interest rate, 1 year  9  2  8  8  1  1  7  7  0  0  6  6  -1  -1  5  -2  5 12  13  Main scenario  14  15  16  2  -2 12  13  14  15  16  Lower interest rate  Sources: Statistics Sweden and the Riksbank  Secondly, I have seen an incipient credibility problem and wanted to formulate monetary policy so that it appears well-balanced even when combined with assessments made outside of the Riksbank.