the financing environment to be quite accommodative. four factors have contributed to this improvement in financial conditions : low interest rates, a widespread restructuring of corporate liabilities during the past few years, significant cost - cutting and productivity gains, and a substantial narrowing in market - risk premiums. even with interest rates expected to rise and profit growth expected to moderate, the financial condition of the business sector should remain strong and able to support continued expansion. i will discuss each factor in turn. first, firms are continuing to benefit from the accommodative stance of monetary policy. even after the fomc raised the target funds rate to 1. 25 percent a few weeks ago, short - term borrowing costs remain very low. for longer - term debt, the combination of low yields on benchmark treasury securities and reduced risk spreads has kept borrowing costs quite attractive. currently, yields on investmentgrade corporate debt generally are at the low end of levels of the past several decades, despite having risen on balance by about ¾ to one percentage point since late spring of last year. for speculativegrade firms, yields have fallen almost one percentage point as spreads contracted sharply. second, in response to low long - term rates and to investors ’ concerns arising from some high - profile, unanticipated meltdowns, firms have greatly strengthened their balance sheets. many firms have refinanced high - cost debt, a move that has reduced the average interest rate on the debt of nonfinancial corporations by more than 1 percentage point since the end of 2000. businesses have also substituted long - term debt for short - maturity debt to improve their balance sheet liquidity and to reduce the risk of rolling over funds. in addition, many firms - especially in the most troubled industries - have retired debt through equity offerings and asset sales, while others have used their mounting profits to retire debt. as a result, the growth of nonfinancial corporate debt in the past two - and - a - half years was limited to its slowest pace since the early 1990s. these repairs to balance sheets have also reduced the exposure of many firms to rising interest rates, especially in the near term. in particular, the replacement of short - term debt by long - term bonds means that less debt will have to be rolled over in the near term at higher rates. in addition, because much of the long - term debt has a fixed rate, interest payments typically are unaffected over the life of the bond. moreover,

and as resource utilisation has increased, inflation has also risen towards the target. it is evidently possible to attain a quantified inflation target. when i follow the debate on monetary policy in sweden, the argument keeps cropping up that the two - per cent target for inflation will be impossible to attain as the economy becomes increasingly digitalised. however, one should also look at events in other developed countries with similar targets. because of course sweden is not alone in being affected by digitalisation. there does not seem to be any clear relationship in these other countries between for instance the spread of e - commerce and inflation. however it is possible that the lack of simple correlations in data hides some causal relationship. better indicators of the spread of digitalisation may give other 22 cavallo ( 2017 ). 23 cavallo ( 2018 ). 24 gorodnichenko and talavera ( 2017 ). swedish trade federation ( 2018 ). 26 sveriges riksbank ( 2018b ). 9 results. my point is therefore that it is up to the critics to present proof of why more digitalisation would necessarily mean that inflation was held below the target for a long period of time. in the longer run inflation is determined by the monetary policy that is conducted on average and its effects on inflation expectations. a better explanation for the differences in inflation rates between countries around the world is therefore that they conduct different monetary policies. having a credible benchmark for price setting and wage formation facilitates longterm planning for both individuals and companies. the inflation target is needed in particular when the world is changing rapidly as a result of major upheavals such as digitalisation. the alternative would be a less stable development and poorer opportunities for good economic growth. clear game rules for a smoothly - functioning economy let me summarise my thoughts : my assessment is that digitalisation contributes to a new way of producing, pricing and demanding goods and services. by maintaining a stable rate of inflation close to our target, monetary policy helps this changeover. to do so, we need to understand the development of economic activity, as well as the effects of structural changes in the economy. what we know is that labour markets change. they become more polarized, which makes it more important for people to update their skills to the new circumstances. the game plan for companies is changing. e - commerce can for example mean that companies ’ prices change more often and become more sensitive to shocks. increased consumer power and greater competition