Riksbank Switching Inflation Gauge Seen Unlikely Amid Reviewby
The central bank is “unlikely” to make changes to its inflation targeting regime as the government plans to start a review of the mandate, said Karolina Ekholm, a top official at the Finance Ministry.
While the bank is independent and has the right to make a switch “it would be a bit erratic if they made big changes and then the review came to the conclusion that it would be better to do this some other way,” Ekholm, who before she joined the ministry was deputy governor at the central bank, said in an interview Thursday at parliament in Stockholm.
The comments come after the Riksbank released a report on the effects of changing the inflation measure it aims for and potentially introducing a band around around the target. The central bank said it would initiate broad discussions before any changes are made.
Ekholm, a state secretary, said the central bank study could be viewed as “some kind of knowledge base” for the government and parliament review of the Riksbank law, which will be started soon and is expected to conclude in 2018.
The Riksbank’s next step is to hold talks with unions, employers and market participants during the autumn, Ulf Soederstroem, an official at the central bank’s monetary policy department, said a press briefing on Thursday. Bank analysts have, for example, been invited for talks next week.
After this informal discussion process, “the board can decide how we move forward in the near future,” Soederstroem said. One way to look at the study from the Riksbank is as an input to the review of the Riksbank law, but that will be a long process, “we don’t know how long it will take and the way the law looks today, it’s the Riksbank board that decides on these types of issues,” he said.