cpi. the eu's statistics office eurostat is currently investigating the possibility of including owner - occupied housing costs in the hicp in line with the net acquisition model, but it is unclear whether or when this will happen. it is worth pointing out – against the background of proposals of taking rising housing prices into account in the inflation measure – that changes in housing prices in all methods only have a limited impact on the index, or no impact at all. how monetary policy should be affected by changes in housing prices ( or other asset prices ) is therefore an issue which must principally be handled separately from the actual measure of inflation. bis central bankers ’ speeches interest - rate cuts since the inflation target was introduced, has contributed to cpi inflation falling substantially below cpif inflation and remaining near zero for three years. correspondingly, cpi inflation will be pushed upwards and exceed the target when the repo rate approaches historically more normal levels in the future. an extremely low rate of increase in cpi inflation therefore tends to be followed sooner or later by an unusually high rate of increase, and these periods can sometimes be relatively protracted. this could look something like figure 4, for example. one could say that major, protracted interest rate movements lead to substantial and long - term surges in cpi inflation – more substantial and long - term than we previously believed would be the case. risk of misleading image and uncertainty about the inflation target this has caused some difficulties, and will likely continue to do so in the future, not least in terms of monetary policy communication. one problem is that the focus on cpi inflation – which in itself is not entirely unnatural – has led to flashy headlines in the media from time to time over the years about sweden being in a state of deflation. when cpi inflation is negative, this is obviously correct in a purely technical sense, but the story behind the headline often fails to explain that it is to a large extent a result of the riksbank lowering the interest rate, and that cpif inflation typically is considerably higher. foreign commentators in particular have therefore often come to the conclusion that the swedish economy is in a highly critical situation and that the state of the real economy is deflationist as well, with very weak growth in production and employment. it cannot be ruled out either that this kind of media reporting can, at least to some extent, affect economic sentiment. it is of course unfortunate if this kind of misleading image takes hold simply because the swedish cpi is calculated in the way it

1 – 3 per cent. inflation and inflation expectations which creep downwards and get stuck near the lower limit of this range could be the riksbank ( 2010 ). see for example fromlet ( 2015 ) and lars jonung in svenska dagbladet ( 2015 ). bis central bankers ’ speeches as problematic as if the inflation target itself had been lowered. it is thus difficult to see that the riksbank would have pursued a notably different policy even if there had been a target range, or that there would be grounds to adjust the current policy if a target range were to be introduced tomorrow. 17 this is probably also the reason why central banks in countries which have a formal target range, such as canada and new zealand, usually aim for the midpoint of the range. 18 after all, the safest way to prevent inflation and inflation expectations beginning to slide out of the range is to attempt to keep them in the middle of it. in this sense, there is no great practical difference between a target range and a point target with a tolerance band. interval good for illustrating uncertainty i believe there are still grounds for discussing whether the swedish monetary policy framework should be complemented once again by some kind of interval. as i see it, the main reason would be to remind people that monetary policy is pursued under considerable uncertainty, and that the riksbank is not able to fine - tune the economy and inflation. it could be seen as paradoxical that it is needed, as the justification for the interval being removed before was that there was widespread understanding for this being the case. my impression, however, is that there is a lingering perception that monetary policy is a tool with a relatively high level of precision and that most things can be managed using well - calibrated policy rate changes. in the discussion about monetary policy, many seem to assume that there are relatively precise relations between the interest rate, inflation and unemployment, a perspective that does not receive much empirical support. this is something to which the riksbank itself probably has contributed somewhat, as some analyses in our reports could have given this impression. for example, we used to regularly present different interest rate scenarios in the monetary policy reports which were based on the effects of policy rate changes on the economy and inflation being calculated relatively mechanically and with seemingly good precision. the fact that the effects of monetary policy are surrounded by major uncertainty and cannot be calculated with good precision is something we probably need to remind people of more or less constantly, and in