, e, groth, c, harrison, r, monti, f, theodoridis, k and waldron, m ( 2013 ), “ the bank of england ’ s forecasting platform : compass, maps, ease and the suite of models ”, bank of england working paper no. 471, may. carney, m ( 2010 ), “ living with low for long ”, remarks at the economic club of canada, toronto, december. carney, m ( 2013 ), “ the spirit of the season ”, speech at the economic club of new york, december. carney, m ( 2015a ), “ from lincoln to lothbury : magna carta and the bank of england ”, lecture at lincoln cathedral, july. carney, m ( 2015b ), “ inflation in a globalised world ”, remarks given at the economic policy symposium hosted by the federal reserve bank of kansas city, jackson hole, wyoming. august. christiano, l, eichenbaum, m and evans, c ( 2005 ), “ nominal rigidities and the dynamic effects of a shock to monetary policy, ” journal of political economy, university of chicago press, vol. 113 ( 1 ), pages 1 – 45, february. cloyne, j and hurtgen, p ( 2014 ), “ the macroeconomic effects of monetary policy : a new measure for the united kingdom, ” bank of england working papers 493, bank of england. gali, j ( 2011 ), “ the return of the wage phillips curve, ” journal of the european economic association, european economic association, vol. 9 ( 3 ), pages 436 – 461, 06. gilchrist, s, and zakrajsek, e ( 2015 ), “ customer markets and financial frictions : implications for inflation dynamics ”, paper prepared for the 2015 economic policy symposium organised by the federal reserve bank of kansas city at jackson hole, wyoming. august. greenslade, j, millard, s and peacock, c ( 2008 ), “ how has globalisation affected inflation dynamics in the united kingdom? ”, bank of england quarterly bulletin, q3. groen, j and mumtaz, h ( 2008 ), “ investigating the structural stability of the phillips curve relationship, ” bank of england working papers 350, bank of england. leeper, sims and zha ( 1996 ), “ what does monetary policy do?,

, is still very high and higher than in many of the countries that have had problems in recent years as a result of substantial falls in housing prices ( see figure 12 ). a high level of household indebtedness can have serious consequences. when the households have large debts they become vulnerable. for example, a substantial fall in housing prices could give rise to extensive debt consolidation on the part of the households, which would risk leading to weak consumption since the monetary policy decision in october, we have also received the national accounts for the third quarter. these figures show that growth declined somewhat, approximately in line with our assessment in october. the mortgage cap was introduced as a general recommendation from finansinspektionen in the autumn of 2010. in simple terms, it imposes a maximum loan - to - value ratio of 85 per cent when purchasing housing. bis central bankers ’ speeches demand and high unemployment. ultimately of course this would also lead to the risk of higher loan losses at the banks and risks to financial stability. 3 it is true that the households ’ total assets exceed their debts by a broad margin. however, these assets are largely illiquid, which means that they would be hard to convert into cash if the households needed to reduce their debts quickly ( see figure 13 ). few other tools are in place – monetary policy has its part to play we can also examine the issue of indebtedness more generally by reviewing the history of stabilisation policy in sweden. during the period with a fixed exchange rate prior to 1992, when responsibility for stabilisation policy lay with fiscal policy, it was not considered that the sovereign debt imposed any limitations on fiscal policy. this eventually led to the sovereign debt becoming unsustainable, and we had to reform the framework for public finances. we gradually managed to put public finances into much better shape and to achieve a falling tend in the sovereign debt as a percentage of gdp ( see figure 4 ). after the fixed exchange rate regime was abandoned in november 1992, we also needed new rules for monetary policy. the inflation target was the solution adopted. inflation has been low and stable since the mid - 1990s and the expectations of the public and the market participants have been anchored around the target of two per cent ( see figure 11 ). we can thus claim that the current framework for stabilisation policy has enabled us to gain control over the sovereign debt and inflation. however, there is no natural limitation of the indebtedness of the