Inflation targeting in Sweden has been a “killer app” for 30 years – but updates need to be downloaded

Riksbank’s Governor Stefan Ingves reviews inflation experiences in Sweden from copper targeting to inflation targeting. He says inflation targeting has been a killer app as inflation has remained low and framework has worked well despite multiple crisis in last decade. However, just like any other killer app IT needs to download updates.

 For the inflation targeting policy to continue to manage the various crises that arise, it needs to be updated as the world around it changes. I have mentioned two updates that I consider to be particularly important: Some of the macroprudential policy tools should lie with the Riksbank and, in addition to price stability, financial stability should be given some weight in monetary policy decisions. With these updates, I would not be surprised if inflation targeting is also the ‘killer app’ for the next 30 years. 

Ingves referring to killer apps and downloads for explaining monetary policy is an interesting way to connect to today’s audience…

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