Sveriges Riksbank. Pettersson, Ola and Hållö, Torbjörn (2013), Riksbanken sköter inte sitt uppdrag. [The Riksbank is not doing its job] (only in Swedish) Debate article in Göteborgs-Posten newspaper, 14 August. Srejber, E. (2002), Inflation Targeting and Bubbles. Speech at Adam Smith seminars, Paris, 9 July. Sveriges Riksbank (2012), Creating a Swedish toolkit for macroprudential policy. Riksbank studies November 2012. Sveriges Riksbank (2013), Consultation response to the report Preventing and managing financial crises (SOU 2013:6). Schularick, Moritz and Taylor Alan M. (2012), Credit Booms Gone Bust: Monetary Policy, Leverage Cycles and Financial Crises, 1870–2008. NBER Working Paper 15512. Swedish Government Official Reports (2013), Förstärkta kapitaltäckningsregler [Stronger capital adequacy rules]. Interim report of the investigation New capital adequacy rules, SOU 2013:65. Stein, Jeremy C. (2013), Overheating in Credit Markets: Origins, Measurement, and Policy Responses. Speech at “Restoring Household Financial Stability after the Great Recession: Why Household Balance Sheets Matter”, research symposium sponsored by the Federal Reserve Bank of St. Louis, St. Louis, Missouri. Talley, Ian (2013), Fed Candidate Kohn Warns Easy Policy Leads to Imbalances. Real Time Economics, Wall Street Journal Blogs, 16 September. Taylor, John B. (1998), Monetary Policy and The Long Boom. Federal Reserve Bank of St Louis Review, November/December. Vredin, Anders, Flodén, Martin, Larsson, Anna and Ravn, Morten O. (2012), Enkla regler svåra tider – behöver stabiliseringspolitiken förändras? [Simple rules, hard times – does the stabilisation policy need to be changed?] (only in Swedish) Economic Policy Group Report 2012, SNS Förlag. 12  BIS central bankers’ speeches

That’s important, but it does not change the need to make judgements, or even make the judgements any easier. Data get revised; models over simplify; forecasts are fallible. It’s essential to invest in state of the art techniques; indeed the Bank has just introduced a new macro economic model. But progress depends just as much on recognising all the uncertainties and allowing for them in a systematic way. The monthly interest rate decision requires a complex assessment of all the evidence. We need to be both sceptical and open minded, if we are to avoid major error: sceptical when it comes to interpreting the data, but alert for signs that we may be getting it wrong. The decision to raise rates in February, while inflation was still well below the new target, reflected a top line view that inflationary pressures were likely to build over the next couple of years. While this has been the emerging picture for some months now, we have been surprised by a number of developments pointing in different directions, which have needed careful evaluation - notably, the resilience of household spending and the strength of the exchange rate. We have also had an opportunity to reconsider earlier judgements, especially about the amount of spare capacity and the likely growth in potential supply. That is the nature of the exercise. March will be another month. There can be no foregone conclusions when it comes to setting interest rates.