Lars E O Svensson: Flexible inflation targeting – lessons from the financial crisis Speech by Mr Lars E O Svensson, Deputy Governor of the Sveriges Riksbank, at the workshop “Towards a new framework for monetary policy? Lessons from the crisis”, organized by the Netherlands Bank, Amsterdam, 21 September 2009. I am grateful to Claes Berg, Ylva Hedén, Jonas Niemeyer, Virginia Queijo von Heideken, Annika Svensson, Ulf Söderström, Staffan Viotti, Anders Vredin, Karl Walentin and, especially, Björn Lagerwall, for comments and help with the speech. The views presented here are my own and not necessarily those of other members of the Riksbank’s executive board or staff. * 1. *  *  Introduction  The financial crisis has raised some questions regarding monetary policy and how it should be conducted in relation to financial conditions such as credit growth, asset prices, imbalances, the risk of creating bubbles and so on. I will discuss two particular questions: Has monetary policy contributed to the conditions for the crisis? Do the lessons from the crisis justify any changes in the way best-practice monetary policy should be conducted? I will lay out my pre-crisis view of best-practice monetary policy – flexible inflation targeting – and its relation to financial stability and asset prices, discuss the role of monetary policy in possibly contributing to the current financial crisis and, finally, present my conclusions on whether flexible inflation targeting needs to be modified in the light of the crisis. 2.

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