see for example dynan 2012, mian et al. 2013, and andersen et al. 2014 ). studies that compare developments in different countries also indicate that high or growing indebtedness in the household sector entails higher risks to the real economy, even if the households also have substantial assets ( see for example imf 2012, jorda et al. 2013, and floden 2014 ). see riksbank ( 2014b ). bis central bankers ’ speeches inflation? this question is particularly relevant given that the repo rate is at zero and cannot be cut much more. i think that the question, at least in principle, should nevertheless be answered in the affirmative. it must be possible to meet financial risks with targeted measures even if this makes it more difficult for monetary policy to attain the inflation target. at the same time, it is of course desirable that the measures targeted at household indebtedness and the housing market do not in themselves lead to an economic downturn or unnecessarily obstruct monetary policy. the primary aims of policy in this area must be to ensure that the build - up of household debt slows down, that the households gradually become more resilient to shocks of various kinds and that the housing and mortgage markets become more effective. this is thus a question of a long - term adjustment process that must take place in suitablylarge steps. the amortisation proposal – a step in the right direction i see last week ’ s amortisation proposal as one such suitably - large step in the right direction. as only new mortgages will be covered, increased amortisation will be phased in over a long period of time. in combination with many new mortgage borrowers already amortising, and because the proposal entails only a moderate increase in amortisation rates, this means that the macroeconomic consequences will probably be small during the first few years. according to the riksbank ’ s estimate, the amortisation proposal will have reduced the household debt ratio by 0. 6 percentage points after five years compared with a base scenario. this means that the proposal will increase amortisation payments by less than 0. 1 per cent of gdp per year during the period. 5 the amortisation proposal thus appears to be well balanced at the moment, but work on the long - term adjustment process must continue. there are many factors to take into account when considering further measures. one such factor is how

consequences for monetary policy. we can expect more central banks abroad to conduct an expansionary monetary policy in order to counteract the dampening effect of fiscal tightening on demand. however, as policy rates in many countries are already close to zero there is limited scope for further policy - rate cuts. many central banks are instead expected to leave their policy rates unchanged for some time to come. low policy rates can also be combined with unconventional measures designed to push down long - term interest rates. 9 if the market expects the policy rate in sweden to be significantly higher than policy rates abroad, this can lead to an increase in the demand for assets in kronor as a higher swedish rate, all else being equal, increases the return on investments in swedish currency. this normally contributes to a strengthening of the krona exchange rate in the short term. a stronger krona slows down any increase in import prices. for the riksbank, which conducts an inflation targeting policy, this could be positive if inflation was high in the initial position. however, as underlying inflation is currently low, i have argued that a strengthening of the krona would, if anything, have a negative effect. moreover, a stronger krona has a negative effect on net exports as it means that goods and services produced in sweden become relatively more expensive. this in turn has a negative effect on gdp growth and resource utilisation. as i see it there are two reasons why recent developments abroad contributed to the decision to leave the repo rate unchanged and to revise the repo rate path downwards at the latest monetary policy meeting. the first is that weaker growth abroad has a negative impact on growth in sweden too and this needs to be countered by providing a stronger monetary policy stimulus. the second is that expectations that monetary policy will remain expansionary in large economies like the unites states and the euro area, for a longer period than was previously assumed, also have an effect on swedish monetary policy. swedish interest rates cannot deviate too much from foreign interest rates without this having an effect on the exchange rate. the exchange rate is of great importance to both inflation and resource utilisation and thus influences what constitutes a well - balanced monetary policy. what then will be the overall effect for sweden? we were able to note in september that the demand for swedish exports was growing more slowly than previously expected due to the weaker development of the export markets of importance to sweden. this weaker development is partly due to the fact that market turbulence resulting from the