Växelkursmålet

Växelkursmålet refers to a monetary policy strategy where a country's central bank aims to maintain its currency at a specific exchange rate against another currency or a basket of currencies. This fixed exchange rate is the primary objective of monetary policy, and other economic goals are often subordinated to achieving and maintaining it.

The rationale behind adopting a växelkursmål can vary. It can be used to import price stability from a country with a strong track record of low inflation, thereby anchoring domestic inflation expectations. It can also promote trade and investment by reducing exchange rate volatility and providing greater certainty for businesses engaged in international transactions. For smaller economies, it can be a way to enhance credibility and signal commitment to sound economic policies.

However, maintaining a fixed exchange rate comes with significant trade-offs. The central bank must be willing and able to intervene in foreign exchange markets, buying its own currency and selling foreign reserves when there is downward pressure, and vice versa when there is upward pressure. This can lead to a depletion of foreign exchange reserves. Furthermore, a fixed exchange rate system can limit the central bank's ability to conduct independent monetary policy. For instance, if the central bank needs to raise interest rates to combat inflation, but the country is experiencing capital outflows and pressure on its currency, it must defend the exchange rate, potentially exacerbating domestic economic slowdown. Conversely, if the central bank needs to lower interest rates to stimulate the economy, it may be constrained by the need to prevent its currency from depreciating beyond the target. This loss of monetary policy independence is a key challenge of a växelkursmål.