trying to say that the riksbank can control inflation with any precision. it is neither desirable nor possible for monetary policy to continuously hold inflation stable and close to the inflation target of 2 per cent. but monetary policy can prevent inflation from falling way below the target over a long period of time. references ball, laurence and sandeep mazumder ( 2011 ), “ inflation dynamics and the great recession ”, brookings papers on economic activity spring 2011 42 ( 1 ), 337 – 405. bayoumi, tamim, giovanni dell ’ ariccia, karl habermeier, tomaso mancini - griffoli and fabian valencia ( 2014 ), “ monetary policy in the new normal ”, imf staff discussion note 14 / 3. bordo, michael and andrew filardo ( 2005 ), “ deflation in a historical perspective ”, bank for international settlements working papers no. 186. coibon, olivier and yuriy gorodnichenko ( 2013 ), “ is the phillips curve alive and well after all? inflation expectations and the missing disinflation ”, nber working papers no. 19598. drehmann, mathias, claudio borio and kostas tsatsaronis ( 2012 ), “ characterising the financial cycle : don ’ t lose sight of the medium term! ”, bank for international settlements working papers no. 380. eggertsson, gauti and paul krugman ( 2012 ), “ debt, deleveraging, and the liquidity trap : a fisher - minsky - koo approach ”, quarterly journal of economics, 1469 – 1513. fisher, irving ( 1933 ), “ the debt - deflation theory of great depressions ”, econometrica 1, 337 – 357. floden, martin ( 2012 ), “ a note on swedish inflation and inflation expectations ”, manuscript, stockholm university. hopkins, elisabeth, jesper linde and ulf soderstrom ( 2009 ), “ the monetary transmission mechanism ”, economic review 2009 ( 2 ), sveriges riksbank. imf ( 2013 ), chapter 3 – the dog that didn ’ t bark : has inflation been muzzled or was it just sleeping? world economic outlook, april 2013. international monetary fund. karlsson, olov and richard fredriksson ( 2013 ), “ hur har genomslaget fran reporantan till bolanerantorna paverkat

they argue that inflation faces such strong ‘ headwinds ’ in the form, for example, of globalisation and digitalisation that it is doubtful whether central banks can steer inflation in any meaningful way. instead, it is argued, monetary policy should be focused on dampening financial cycles and maintaining financial stability. 1 on the other side are most central banks, who argue that rumours of inflation targeting ’ s imminent demise are significantly exaggerated. they admit that it has now become more difficult and more complicated to conduct monetary policy, when global real interest rates have fallen for a long time and are currently very low. this means that central banks ’ policy rates are likely to reach their lower bounds more often and that monetary policy will occasionally have to be conducted using other means than policy rate cuts. they also agree that digitalisation and globalisation are making it more difficult to reach inflation targets. but, it is argued, even if these complications must be managed, there is nothing to indicate that the inflation process should have changed so much and so fundamentally that inflation targets have become unobtainable and that inflation targeting as such would have to be fundamentally reassessed. financial times columnist gavyn davies has described this debate as an implicit ideological struggle between claudio borio, chief economist at the bank for international settlements ( bis ), perhaps the leading advocate of the new ideas, and the departing chair of the board of governors of the us federal reserve system, janet yellen, advocate of the traditional view. 2 there are good reasons for looking more closely into this debate. one is that it will probably be an important part of international monetary policy discussions in the years ahead. another is that the debate is not merely about practical monetary policy but in fact also about fundamental issues within economic science. the debate in sweden is ahead of the international debate there is reason to believe that the experiences we have had in sweden in recent years mean that we can make useful contributions to the international debate. for quite some time, we have had a discussion on the process of inflation and the conditions for inflation targeting, while this is a relatively new phenomenon in there is also a parallel debate on whether the inflation target should be replaced, for example, with a pricelevel target or a target for nominal gdp. however, i will not address this debate in this speech. 2 see davies ( 2017 ). for the sake of simplicity, i will adopt davies ’ terminology hereafter and refer to the two opinions as the ‘ borio camp ’ and the