speaking points date : 2017 - 12 - 07 speaker : deputy governor cecilia skingsley venue : international economic forum of the americas, oecd conference center, paris sveriges riksbank se - 103 37 stockholm ( brunkebergstorg 11 ) tel + 46 8 787 00 00 fax + 46 8 21 05 31 registratorn @ riksbank. se www. riksbank. se what role for monetary policy in achieving inclusive and sustainable growth? • i intend to say a few words about the role of monetary policy in achieving inclusive and sustainable growth. • i would like to start by saying that in general, a well - balanced monetary policy, including a price stability target, contributes to sustainable growth, and that sustainable growth is normally positive for equality. • achieving the monetary policy goal of keeping inflation low and stable leads indirectly to positive effects on equality, as households with low incomes don ’ t have the possibility to shield themselves from the costs connected with high and volatile inflation. • the press release from 15 january 1993, when the inflation target in sweden was announced, stated : “ price stability is a prerequisite for sustained economic growth as well as full employment and it prevents an arbitrary redistribution of income and wealth ”. • if inflation is higher than expected, borrowers benefit because the value of their debts declines, while lenders and those with large savings lose out. this type of large, arbitrary redistribution between lenders and borrowers was common in sweden during the 1970s and 1980s, but is now history. • on the other hand, households with low incomes also suffer if inflation is too low due to low aggregate demand. these households are usually very exposed to the business cycle and, more often than not, face unemployment and lower living standards when there is a trough. so, again, low and 1 stable inflation is an important contribution from monetary policy. • when looking at effects on equality, there are different channels from monetary policy at play. • these include the exchange rate, effects on stock prices, house prices and the labour market. • low interest rates increase demand and are often associated with higher share prices and house prices. as shares are typically owned by high income earners, this increases the capital income for those at the upper part of the income distribution 1. house ownership is normally more evenly distributed than shares 2, so higher house prices would have smaller effects on equality. • the labour market channel is sometimes ignored when analysing the monetary policy effects

all fiscal or structural policy issues, outside the scope of monetary policy, but still important in a global perspective. • to summarize : globalisation and technology are strong forces that rapidly shape the world. policymaking is needed to facilitate the changes that ensue for individuals, companies, the public sector and countries as a whole. in that policymaking, i want to stress that each and every policy area should do what it does best to make good contributions when the changes are being managed. • thank you! - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - references • alvaredo, f., a. b. atkinson, t. piketty, and e. saez ( 2013 ), “ the top 1 percent in international and historical perspective ”, journal of economic perspectives volume 27, number 3, 2013. • bivens, j., ( 2015 ), “ gauging the impact of the fed on inequality during the great recession ”, hutchins center on fiscal and monetary policy at brookings, working paper 12, june 2015. • coibion, o., y. gorodnichenko, l. kueng, j. silvia, ( 2017 ), “ innocent bystanders? monetary policy and inequality ”, journal of monetary economics, volume 88, june 2017. 4 • deutsche bundesbank ( 2016 ), “ distributional effects of monetary policy ”, monthly report, september 2016. • frederiksen, a., o. paulsen, ( 2010 ) “ increasing income inequality : productivity, bargaining and skill - upgrading ”, iza discussion paper series no. 4791, february 2010. • furceri d., p. loungani, and a. zdzienicka ( 2016 ), “ the effects of monetary policy shocks on equality ”, imf working paper, wp / 16 / 245, december 2016. 5