this be described as a contractive turn ; it is rather a move that yields a less expansionary stance. in the public debate the riksbank ’ s monetary policy is sometimes described as though repo rate adjustments were a form of “ punishment ” or “ reward ”, aimed at measures that have been taken either by the political system or by labour market organisations in connection with wage negotiations. my point here has been that interest rate adjustments are a natural feature of monetary policy ’ s path over the economic cycle. of course this does not mean that the construction of monetary policy is not affected by fiscal expansion or contraction, or by low or high wage settlements. what i want to make clear is that adjustments to the instrumental rate in the course of the economic cycle are a natural phenomenon and their purpose is to create conditions for sustained growth and low inflation. if a central bank waits too long before shifting from an expansive to a more neutral monetary stance, problems with bottlenecks are liable to become more widespread and the economy may become overheated. besides entailing rising inflation, this causes firms and households to start accustoming themselves to a high level of inflation. monetary policy may then be forced to adopt a contractive stance in order to bring inflation back to the target rate. so if the central bank waits too long, the interest rate increases may be all the larger. in the meantime, moreover, economic imbalances and tensions may become so great that they lead to economic setbacks. we are familiar with such a course of events from the 1970s and 1980s, and perhaps not least from the early 1990s. against this background, in situations when capacity is coming under pressure, it is clearly better for a central bank to act at an early stage. future inflation the assessment in the inflation report, published just over a month ago, is that growth in the swedish economy will be about 2 per cent in 1997 and around 3 per cent in 1998. in 1999, the rate is expected to go on accelerating to just over 3 per cent. this assessment envisages that, in an expanding world market, export growth remains relatively high. this is accompanied by an accelerating increase in private consumption, while public consumption at least stops falling. economic growth in sweden in 1998 and 1999 would then most probably exceed the potential rate, which is estimated to be just over 2 per cent in annual terms. the broad rise in all the major demand components will therefore gradually exert pressure on the available resources. this successive

s monetary policy that is published next year. 19 but even if the experiences of the past eight years have had limited impact on monetary policy strategies so far, the financial crisis has nevertheless had clear effects on the work of the central banks. if i use the riksbank as a starting point, for instance, the significance of the financial conditions for macroeconomic developments and for monetary policy have come under much greater focus than before, as have financial and banking questions in general. one can see this in the research conducted in the bank, where these areas are currently of central importance. the changes we recently made to our monetary policy report are also marked by the need to better highlight the links between financial conditions, the macroeconomy and monetary policy. the low inflation in recent years has of course also made its mark on our internal work and we have invested considerable resources in trying to understand which factors lie behind it – both from a short - term perspective and in a more structural perspective. so, to conclude by returning to the question of whether everything will go back to the way it was before the financial crisis, i think the answer depends on what one is talking about. when it comes to analysis and working methods, the answer is very clear : they need to be adapted to new experiences and changed conditions to remain relevant. this type of change can be difficult to see for outsiders, but i can assure you the changes are taking place. with regard to major changes in the actual inflation - targeting policy, the answer is not so clear - cut. this remains an open question that spans legislation, research and all those working with monetary policy. references ball, laurence m. ( 2014 ), the case for a long - run inflation target of four percent. imf working paper wp / 14 / 92. bernanke, ben s. ( 2015 ), why are interest rates so low, part 2 : secular stagnation. ben bernanke ’ s blog, brookings, 31 march. billi, roberto and vredin, anders ( 2014 ), monetary policy and financial stability – a simple story. sveriges riksbank economic review, 2014 : 2, sveriges riksbank. blanchard, olivier ( 2015 ), contours of macroeconomic policy in the future. blog post on imfdirect 2 april 2015, http : / / blog - imfdirect. imf. org /. blanchard, olivier, dell ’ aricci