MNI BRIEF: Riksbank's Jansson Makes Case For Steadier Policy
MNI (LONDON) - Riksbank Deputy Govenor Per Jansson said that if the credibility of the inflation target has been enhanced by the central bank's episodes of rapid tightening and easing to keep inflation on track, it could now switch to steadier policy and be less responsive to temporary deviations from target.
Jansson said that rapid changes in the policy rate, as they fed through to sharp swings in the cost of financing for firms and households, had negative effects on the real economy which smoother policy setting could avoid. (see MNI INTERVIEW: Riksbank's Bunge Sees Less Krona Pass-Through )
If there is now more credibility in the 2% inflation goal "at least at the margin, we could allow slightly larger deviations from the inflation target and slightly smaller changes in the policy rate on average," he said in a speech at Handelsbanken in Stockholm. (See MNI INTERVIEW: Riksbank Head Sees Turbo-Charged Policy Biting )