The importance of openness and clarity
It is important for the Riksbank to be open and transparent about what it does and why. There are several reasons for this.
- Monetary policy becomes easier to predict. The general public can more easily be sure that the monetary policy decisions made are really aimed at achieving low and stable inflation. This increases the credibility of the inflation target and makes it easier to anchor inflation expectations among the general public and economic agents. If economic agents can rely on inflation being close to the target, companies do not need to change their prices if, for example, they believe that costs are only rising temporarily. In the same way, stable inflation expectations can result in moderate wage increases.
- This forces the Riksbank to work more efficiently. If the Bank has to report what it does and why, it will hone its analysis.
- The Riksbank’s independence means that the Bank must be open and clear, otherwise it is difficult to assess how well monetary policy works. Increased openness outwards lead to a better discussion of monetary policy.
The Riksbank endeavours to explain openly the reasons for its policy and to do so according to clear principles with a view to winning the confidence and understanding of the general public. Consequently the forecasts and assessments on which monetary policy is based are published so that they may be evaluated and employed in a discussion of the policy conducted.
Information in connection with the monetary policy decisions
The Executive Board normally holds six monetary policy meetings a year. At each meeting the Executive Board decides on the repo rate and on forecasts for the repo rate over the coming three years.
In connection with three of the meetings the Riksbank publishes a Monetary Policy Report containing complete forecasts for economic activity and inflation based on the repo rate path the Executive Board considers to represent a well-balanced monetary policy at that point in time. The Report also contains a description of new information received since the previous Monetary Policy Report and an assessment of how the Riksbank views the current economic situation.
In connection with the other three monetary policy meetings the Riksbank publishes a Monetary Policy Update with forecasts of the most important macroeconomic variables. The Report or Update is published on the Riksbank’s website the day after the meeting. On the same day the Riksbank publishes a press release and holds a press conference. The Reports/Updates and the press releases reflect the view of the majority of the Executive Board. The press release also states how the individual members voted and provides the main motivation for any reservations entered.
Approximately two weeks after the monetary policy meeting the minutes of the meeting are published, which give a general account of the discussions held. As the members of the Executive Board are mentioned by name, it is possible to follow how they have reasoned on various matters and how they finally voted.
In addition, the Executive Board is obliged by law to present a written report on monetary policy to the Riksdag's Committee on Finance at least twice a year. In the spring a special material for assessing monetary policy is presented, while in the autumn a Monetary Policy Report is presented.
Communication between the meetings
Between the meetings the Riksbank can communicate with the aid of speeches, press releases and economic commentaries on the website.
Individual members of the Executive Board can give an account of important monetary policy issues. When the minutes of the monetary policy meeting have been published they can also give a more detailed account of the motives for the stance they have taken. In their speeches they can also comment on new statistics and relate them to the earlier forecasts or describe which variables have been particularly important when making the decision. But the member cannot provide information that would anticipate his or her decision at the next monetary policy meeting.
The speeches and minutes enable an evaluation of the different Executive Board members’ contributions to the monetary policy discussion. They also facilitate democratic control and insight into the Riksbank’s work.