Monetary Policy In Sweeden Flashcards
What is the target variable that the swedish riksbank sets
CPIF, the consumer price index with a fixed interest rate as a traget variable for monetary policy
What is the riksbanks target inglation
2% regardless if initially within or outside target
What is the objective of the Swedish monetary policy
To maintain price stability by ensuring that the change in the CPI remains 2%
What is the secondary objectives of the Swedish central bank
To ensure sustainable growth and high employment
What is meant by stating that the interest rate path is a forecast not a promise
That monetary policy takes time to bear fruit
What is the expected time it takes for monetary policy to bear fruit
2 years
What is the repo rate
The interest rate created by the central bank
What are the objectives stated in the riksbanks act
Price stability, safe and efficient payment system, sustainable growth and high employment
What are their 6 of in the riksbank
6 executive board members meeting 6 times a year if more are not needed
How is the riksbanks independence ensured
Members are forbidwn from taking instructions and it is required to be transparent
What are some past attempts to ensure price stability
Pegging to materials and fixing exchange rates
What are the cons of high inflation
It tends to fluctuate which makes it harder to make good decisions and hampers efficient distribution as well as leading to unfair distribution of wealth
Ehy does the riksbank not target zero inflation
Sometimes inflation is justified if the changes are real and because the real interest rate sometimes needs to be negative to overcome the zero lower bound to stimulate demand.
What does the riksbank mean by a flexible inflation target
That the target may varry a bit to ensure sustainable growth and high employment
What is meant by the central bank being a nominal anchor
That they should keep the nominal real and that the public should trust that that is their aim and that their projections are accurate
How does the tiksbank ensure transperanvy
By holding press releases after each meeting, by giving out a policy report after three of these and by giving reports to the riksdag twice a year
Why has the riksbank the task to promote a safe and efficient payment system
Becouse they have the exclusive right to issue coins and banknotes as well as expertise in the matter so they are in the best position to ensure liquidity as well as systemic and technical accessibility
How does the riksbank lit the overnight interest rate
By creating a separate deposit rate and lending rate individual banks are incentivized to put their rates inside this corridor to be profitable
If the riksbank cannot lend to the government how can it do monetary expansion
By buying government bonds in second hand
How dis the riksbank react to covid
By purchasing all kinds of bonds, municipal, mortgage, corporate
