13  It could be argued that wage formation should be based on inflation always being 2 per cent, as periods below and above the target should cancel each other out in the long term. However, if inflation deviates significantly from the target for a long time, it can be difficult for wage setters to stick to this. Therefore, wage formation would be facilitated if the inflation target were formulated in term of CPIF or HICP inflation rather than in terms of CPI inflation. 14  Until 1999, when the Executive Board was established, monetary policy decisions were made by the General Council of the Riksbank. 6  BIS central bankers’ speeches  The interval remained a part of the monetary policy framework for a long time, but was finally abolished in 2010. The reason for this was that the Riksbank assessed at that time that it had fulfilled its role and was not serving any practical function. In the memorandum published in connection with the decision, it was noted that: “There is considerable understanding for the fact that inflation commonly deviates from the target and that the deviations are sometimes larger than 1 percentage point. Inflation can thus be outside the tolerance interval without threatening the credibility of the inflation target. Such deviations have proved to be a natural part of monetary policy.”15 So as a few years now have passed, it may be justified to evaluate the period where there has been no interval.

Palmqvist, Stefan (2013), “Konsumentprisindex i Sverige och Kanada är inte så lika” (The CPI in Sweden and Canada are not so similar) (In Swedish) Post on the blog Ekonomistas, http://ekonomistas.se/2013/11/20/konsumentprisindex-i-sverige-och-kanada-ar-inte-sa-lika/. Reserve Bank of Australia (1998), The Implications of Recent Changes to the Consumer Price Index for Monetary Policy and the Inflation Target. Reserve Bank of Australia Bulletin, October. Reserve Bank of New Zealand (1999), Minor Technical Change to Inflation Target. Press release, 28 October. The Riksbank (2010), The Riksbank removes the tolerance interval from its specified monetary policy target Memorandum, Basis for Decision, 31 May 2010, http://www.riksbank.se/Upload/Dokument_riksbank/Kat_publicerat/Pressmeddelanden/2010/ nr27_beslutsunderlag.pdf. The Riksdag (2014), Committee on Finance appoints top names to evaluate the Riksbank's monetary policy. Press release, 17 June. Skingsley, Cecilia (2015), Inflation-targeting policy after the financial crisis. Speech at Almega, 22 May. Svenska Dagbladet (2015), “Professorn varnar för låga räntan,” (Professor warns about low interest rate) (In Swedish) 18 November. 10  BIS central bankers’ speeches  Figure 1. Stable Swedish economy  Note: The yield differential refers to 10-year government bonds, monthly data. Sources: Thomson Reuters and the Riksbank  Figure 2. Major direct impact of interest rate changes on CPI inflation  Note: Weighted mortgage rate is chained in December 2014 due to an altered measurement method. Sources: Statistics Sweden and the Riksbank  BIS central bankers’ speeches  11  Figure 3. CPI inflation varies a lot more than CPIF and HICP inflation  Note: The CPIF is the CPI with a fixed mortgage rate. HICP refers to the EU-harmonised index for consumer prices.