” speech delivered at “ how the fed will respond to the covid - 19 recession in an era of low rates and low inflation, ” an event hosted by the hutchins center on fiscal and monetary policy at the brookings institution, washington, september 1, https : / / www. federalreserve. gov / newsevents / speech / brainard20200901a. htm. - 3employment in either direction, monetary policy will now seek to eliminate shortfalls from maximum employment. in other words, the new framework calls for policy to address employment when it falls short of its maximum level, whereas the previous framework called for policy to react when employment was judged to be too high as well as too low. the new monetary policy framework also eliminates the previous reference to a numerical estimate of the longer - run normal unemployment rate and instead defines the maximum level of employment as a broad - based and inclusive goal for which a wide range of indicators are relevant. additional changes address the persistence of below - target inflation and the decline in the equilibrium interest rate. research and experience indicate that persistent low equilibrium interest rates increase the frequency and duration of periods when the policy rate is pinned close to zero, unemployment is elevated, and inflation is below target. 6 as a result, actual inflation and inflation expectations will tend to be biased below the 2 percent target, further eroding policy space and exacerbating the effects of the lower bound, risking a downward spiral for actual and expected inflation. from the time of the federal open market committee ’ s ( fomc ) announcement of a 2 percent inflation objective in january 2012 through the most recent data in november, monthly readings of 12 - month personal consumption expenditure ( pce ) inflation have averaged 1. 4 percent and have been below 2 percent in 95 out of the 107 months. see kathryn holston, thomas laubach, and john c. williams ( 2016 ), “ measuring the natural rate of interest : international trends and determinants, ” working paper series 2016 - 11 ( san francisco : federal reserve bank of san francisco, december ), http : / / www. frbsf. org / economicresearch / publications / working - papers / wp2016 - 11. pdf ; and lael brainard ( 2015 ), “ normalizing monetary policy when the neutral interest rate is low, ” speech delivered at the stanford institute for economic policy research, stanford, calif., december

, would thereby cease. in summary, it could very well be beneficial to have lower indebtedness from a distribution perspective. the most important effect of lower indebtedness is, as i have pointed out several times before, reduced risks to the financial system. but, as well as this, mortgage borrowers ’ disposable income and thereby their consumption may thus also become higher over the longer term. the riksbank ’ s responsibility for financial stability needs to be clarified one of the primary tasks of the riksbank is to “ promote a safe and efficient payment system ”, as it is expressed in the legislation. this means that the riksbank is to conduct a policy for financial stability but no more exact definition is given. one controversial issue in this context is whether monetary policy should take consideration of the risk of a financial crisis. it is not unusual for central banks with inflation targets to take practical account of financial stability in their monetary policy framework – a few examples of this are the bank of england, the bank of canada, norges bank and the reserve bank of new zealand. i consider that the riksbank ’ s responsibility should also include financial stability and this should be clarified in the sveriges riksbank act. in recent years, economic policy, including monetary policy, has focused on tidying up after the global financial crisis, which has been very expensive. 17 as monetary policy affects the economy through some of the same channels as various macroprudential policy measures and normal stabilisation policy, it seems likely that a slightly less expansionary monetary policy ahead of the financial crisis could have contributed towards a better economic development. we should therefore ask ourselves whether we should continue to consider financial stability 17 estimating the overall cost to society of a financial crisis is difficult and associated with a high degree of uncertainty. sveriges riksbank ( 2017b ) notes that estimates in academic research indicate that the costs of a crisis can vary between 8 and 300 per cent of gdp, depending on which methodology is used, the definition of a crisis, the time horizon and the countries studied. for sweden, it is estimated that the cost of a financial crisis can be expected to be around 180 per cent of gdp, calculated as the present value of the gdp loss over time. 17 in the same way as prior to the financial crisis or whether monetary policy should actually take explicit account of the risk of a financial crisis. my view is that financial stability and monetary policy are