households are borrowing substantially, they have a good ability to pay on average. moreover, swedish households, unlike us households, have substantial savings, both real and financial savings. as shown in the riksbank ’ s financial stability report, which was published earlier today, the risk of households as a collective suffering payment problems if interest rates rise or housing prices fall, is slight. and even if a large number of households were to experience difficulties in meeting interest and mortgage payments on their loans, it would not threaten the banks ’ capital adequacy or the stability of the swedish financial system. although households will manage well on average, i believe there is still reason to question whether individual households are not borrowing more than is reasonable in the long term and thereby increasing their sensitivity to unforeseen events. at the riksbank we have expressed concern, in various contexts, that households have excessive confidence that interest rates will remain low for a long period of time. the average period for fixing interest rates has fallen to 12 months, despite the fact that long - term interest rates have been at lower rates than ever. it is easy to be seduced by a low monthly cost and forget that even minor increases in interest rates will lead to a proportionately large increase in loan costs. if, for instance, the interest rate rises from 3 to 4 per cent, it means that the monthly cost will increase by one third. there is reason for the riksbank to closely monitor developments in household borrowing. however, this is a question of concern over developments in individual households and over the effects on house prices rather than a question of stability within the banks and the financial system. what will be the future direction for monetary policy, given the current situation? the inflation target, the simple policy rule and the clarification of the principles behind monetary policy together provide a clear intellectual framework, which has guided our actions in recent years. in my opinion, this intellectual framework provides a sufficient degree of flexibility for monetary policy. the policy rule shall not be applied mechanically under all circumstances. this is particularly important given that the economic reality appears to be taking on increasing complexity and becoming more difficult to define. the inflation report published in mid - march contained the assessment that economic growth in sweden and abroad would remain high over the coming years. our forecast for sweden was a growth rate of around 3 per cent a year, which is higher than we consider to be sustainable in the long term. the new information received since then has been mixed

cap of 26 per cent on individual loans. later, in 2012, the fixed interest rate ceiling of 26 per cent was removed while in april 2014 an additional criterion was introduced where in the lending rate was fixed at a multiple ( 2. 75 times ) of the average base rate of five largest commercial banks. 15. the regulatory ceiling on interest rate is applicable only to nbfc - mfis. the prescription of a ceiling on lending rate for nbfc - mfis has had an unintended consequence of not allowing competition to play out. there is a concern that the current guidelines, while prescribing an interest rate ceiling for only nbfc - mfis, are effectively acting as a benchmark for other lenders as well. it is generally observed that interest rates of other lenders in micro finance segment also hover around this ceiling despite comparatively lower cost of funds. even among nbfc - mfis, increasing size of the operations leading to greater economy of scale has not resulted in any perceptible decline in their lending rates. as a result, it is the borrowers who may be getting deprived of the benefits of enhanced competition, monetary policy impulses as well as economies of scale. 16. while banks ( including sfbs ) have been advised to benchmark all new floating rate personal or retail loans to an external benchmark w. e. f. october 1, 2019, benchmark - based pricing has not been introduced for nbfcs, including nbfc - mfis, yet. in view of the substantial divergence between the financing and operational costs among the lenders operating in the micro finance space, mandating any specific benchmark or any spread over a benchmark is unlikely to remove the constraints observed in the current system. therefore, under the revised framework, it is proposed to do away with the prescribed ceiling and mandate all lenders to have a board approved policy on all - inclusive interest rate charged to the micro finance borrowers. the lenders would also have to make available a simplified factsheet on pricing of micro finance loans to the borrowers along with the disclosure of minimum, maximum, and average interest rates charged by them. the intention is to enable the market mechanism to come into play with the expectation that it will bring the lending rates downwards for the entire microfinance sector and empower the customer through transparent disclosures. customer protection measures 17. now, let me dwell briefly upon one other