NEWS / Foreign Exchange

New Riksbank board members appointed

• The Riksbank General Council has appointed Professor Lars EO Svensson and SBAB Chief economist Barbro-Wickan-Parak as new members of the Executive board as from May 21 2007

Professor Lars EO Svensson is currently Professor at Priceton University and is a leading economist is research concerning central bank policy making. Professor Svensson is currently a member of the Monetary Policy Advisory Board for the Federal Reserve Bank of New York and has previously worked as an advisor to the Swedish Riksbank. There is no doubt that by appointing Professor Svensson the Executive Board has recruited a world famous academic with great influence on modern monetary policy making.

Professor Svensson can be seen as an important advocate for independent and transparent central banks. This includes central banks presenting explicit forecasts for future key rate developments as a way to communicate how the appropriate policy strategy is assessed. Mr Svensson has also done important work concerning the trade-off between a strict mechanical inflation target on one hand and other considerations such as resource utilisation on the labour market on the other - i.e what is usually called flexible policy making. In this respect it is quite clear that Professor Svensson already has had a significant influence on the framework for the Riksbank??™s policy making. In terms of operational policy making (dove-hawk) it is much harder . if possible - to define where to position Professor Svensson, time will tell.

Barbro Wickman-Parak succeeded Irma Rosenberg as Chief economist at mortgage institute SBAB in 2003. Wickman-Parak has also previous experiences working at the Riksbank (issues related to the credit market).

In policy issues we would say that Barbro-Wickman is rather close to Irma Rosenberg. She has been member of Dagens Industri??™s ???shadow-board???. In the most recent meeting (March 26), she voted for keeping the repo rate unchanged, pointing to the fact that the current low inflation rates gives an opportunity to maintain a gradual approach. Of some interest is the fact that she stressed that high profit margins in businesses might to some extent contain effects on inflation by industrial wage deals (10.2% over the next 3 years) being on the high side of expectations. This is quite well in line with the arguments brought forward by Irma Rosenberg (and the RB economists) recently. From that point of view she appears to be less alarmed concerning inflation risks that for instance Svante ?–berg who has expressed a rather negative interpretation of the current wage negotiations which reveals doubts as to weather the general ideas of a less inflation prone economy is correct or not.