are building up that risk leading to very poor macroeconomic outcomes in the longer run. according to this outline, decision - makers need to balance target attainment in the short and medium term against target attainment in the long term. thus, there are two questions one needs to take a stance on : how does indebtedness affect the risk that shocks will lead to a really severe depression? and to what extent can monetary policy affect indebtedness and thus the risk of this type of scenario? the latter question, in particular, is important in this type of trade - off. unclear benefits but clear costs monetary policy is the most effective tool we have for influencing general price developments. it has an impact through, for instance, credit growth in the economy. monetary policy can therefore be used to dampen credit growth when it appears alarmingly high, even if this does not appear justified on the basis of the prospects for inflation. however, it is not alarmingly high credit growth that is visible in the swedish economy now, but a high level of debt in the household sector that is primarily a consequence of high credit growth prior to the financial crisis ( see figure 3 ). at present, growth in household credit is only slightly higher than growth in disposable incomes. growth in corporate credit is at the same time low. 13 the increase in lending by the major banks over the past five years has consisted almost entirely of swedish mortgages ( see figure 4 ). my assessment is that it does not have any major impact on household debt to hold the repo rate slightly higher for a limited period of time ( see figure 2 ). 14 to have an effect that is more than marginal, one would probably need to hold the repo rate so high that the costs in terms of poorer macroeconomic growth would be very high. so what one gains by monetary policy leaning against the wind in terms of dampening debt, reducing vulnerability in the economy sveriges riksbank ( 2013 ). this is, of course, a simplification. actually, an unfavourable scenario could also occur within the normal forecast period, that is, within the next three years. see also sveriges riksbank ( 2013 ). companies ’ market borrowing has increased in recent years, which to some extent compensates for the downturn in growth in bank loans. however, even if one takes this market borrowing into account, credit growth in the corporate sector appears relatively low. model estimates of

, was delegated to central banks along with a more independent status and with a clear mandate to hold prices stable. in practice, the riksbank conducted its monetary policy independently from the mid - 1990s, but formally it was not given an independent status until 1999. 4 the instrument of government and the sveriges riksbank act were then amended as part of the adjustment to the requirements in the eu treaty, requirements that were of course affected by the insights gained and by developments in the field of monetary policy. the changes in the regulatory framework meant, for instance, that an executive board was appointed at the riksbank, consisting of six members and with the task of independently conducting monetary policy. at the same time it was confirmed by law that the objective of the riksbank ’ s operations would be to maintain price stability. the independence thus concerned which interest rate decisions would attain the price stability target in the best way, not what objective the central bank would have for its operations. backstrom ( 2003 ). see backstrom ( 1998 ). bis central bankers ’ speeches better development with an anchor in place as i mentioned earlier, the inflation target gained credibility relatively quickly and inflation expectations were soon anchored around 2 per cent. the severe weakening of the krona when it was allowed to float also stimulated exports, which made the consolidation of public finances easier in the mid - 1990s and helped the swedish economy to climb out of the deep recession. the new framework for both monetary policy and fiscal policy and more efficient wage - bargaining rounds contributed to the rate of inflation declining and moreover fluctuating much less from year to year in relation to the 1970s and 1980s. the much calmer development of inflation was also supported by more stable inflation abroad. it is important to remember that developments with lower inflation and reduced volatility were not an isolated event in sweden, but an international trend. from the mid1980s there was a period when the fluctuations in many industrial nations ’ economies were considerably dampened in relation to earlier decades. the reasons for this development, “ the great moderation ” as it came to be called, have been the object of considerable analysis and debate. it was probably the result of a number of interacting factors. but there are many indications that the changes in the monetary policy field that took place on a broad front during this period were an important reason why inflation began to fluctuate much less. 5 inflation - targeting policy after the crisis as in the early 1990s, the most recent