Martin Flodén: Monetary policy in a changing world

Speech by Mr Martin Flodén, Deputy Governor of the Sveriges Riksbank, at Örebro University and Kommuninvest, Örebro, 13 November 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Accompanying slides of the speech.

Over the past year it has become increasingly clear that economic growth is slow-ing down, both in Sweden and abroad. It is not surprising that growth is slightly lower than during the strong years 2014-2018. But there have recently been in-creasing signs that the slowdown will be larger and occur faster than we at the Riksbank have been expecting.

To determine how monetary policy should react to this, we need to understand why growth is falling. Is it due to weaker cyclical economic activity, or to deeper, structural changes in the economy?

Today I intend to first briefly discuss some structural changes that may have had significance for economic developments in recent years. These are changes that may have entailed lower underlying interest rates and growth and lower inflation-ary pressures, and which may affect the conditions for the Riksbank's work going forward.