Sweden’s Riksbank Deputy Governor Per Jansson defended the central bank’s record on inflation and said it was within its mandate to also focus on debt imbalances when setting interest rates.
The policy maker said that “the Riksbank has not exaggerated its inflation combating and that the average outcome for inflation must be regarded as acceptable, in that a large part of the deviation from target is due to interest rates falling more than they have risen,” according to a text released by the Stockholm-based bank today.
Sweden’s central bank said in April it probably will keep its repo rate at 1 percent at its next meeting in July while not ruling out a fifth rate cut since 2011. Policymakers are trying to spur inflation closer to a 2 percent target without fueling household credit growth.
Jansson also said in his speech in the Swedish capital that “the experiences of other countries in connection with the financial crisis show that excessive debt can result in a situation with weak demand, high unemployment and low inflation,” and “giving consideration to risks in this area is thus entirely in line with the Riksbank’s objectives and mandate.”
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