our economy is never again devastated by a financial collapse. the federal reserve has been granted, both in law and in political tradition, considerable independence and autonomy. that independence serves important public objectives. critically, it allows the federal open market committee to make monetary policy in the longer - term economic interests of the american people, rather than in the service of shortterm political imperatives. it also allows the federal reserve to make supervisory decisions based on the facts of each case and the need to preserve financial stability, not on the basis of political considerations. in the interest of maintaining public confidence and promoting economic and financial stability, we must continue to protect our independence. at the same time, in a democratic society like our own, institutional independence brings with it fundamental obligations of transparency, responsiveness, and accountability. the federal reserve is already one of the most transparent and accountable central banks in the world, providing voluminous information and explanation concerning all of its activities. however, i believe that we should be prepared to do even more, to become even more transparent. it is essential that the public have the information it needs to understand and be assured of the integrity of all our operations, including all aspects of our balance sheet and our financial controls. we will continue to work with the congress to ensure maximum transparency of america ’ s central bank, without compromising our ability to conduct policy in the public interest. these are just some of the challenges that we will all face in the coming months and years. i thank you for the many expressions of support i received during the confirmation process, for your hard work and dedication, and for your service to your country. i look forward to continuing to work with all of you to strengthen our economy and to make the federal reserve as effective as it can possibly be in advancing the economic wellbeing of all americans. thank you.

an average annual rate of about 3 % – since the upturn in the summer of 1993. today, moreover, there is no immediate threat to price stability. market interest rates rising the better economic situation and expectations that inflationary pressure will be somewhat higher than before have caused a worldwide increase in market rates of interest. sweden is no exception. during the summer the five - year t - bond rate, for example, has moved up just over 1. 0 percentage point. along with this increase, the spread between t - bond and other interest rates has widened. in other words, the rates for long borrowing by housing institutes and firms have risen relatively more than the rate the treasury has to pay for government borrowing with the same maturity. since june, the rate for a five - year housing bond has moved up around 1. 3 percentage points. similar shifts have been noted in the international financial markets. spreads of this kind often tend to widen when the future path of interest rates becomes more uncertain. besides the uncertainty about interest rate tendencies in the cyclical upswing, a contribution to the wider spreads is said to have come from the turn of the millennium : concern about limited liquidity at the turn of the year is considered to induce some investors and borrowers to try to carry out transactions earlier. in this context i should like to take the opportunity to underscore that the riksbank, with its responsibility for monetary policy and financial stability, has the instruments that are needed to manage any liquidity problems that may arise. together with the extensive preparatory work that has been done in the financial sector, this means that the turn of the millennium should not be seen as a serious problem. the revised expectations of future inflationary pressure have entailed an adjustment of expectations about monetary policy. price setting in the financial markets includes built - in expectations that in the coming years many central banks, including the riksbank, will be raising their instrumental rates. a point worth noting is that, if they continue, today ’ s higher market interest rates will have a direct impact on inflation from household interest expenditure, just as the recent years ’ steeply falling interest rates had a sharp downward effect on inflation. in that case, the higher interest expenditure would pull cpi inflation upwards fairly rapidly towards the targeted rate and above inflation ’ s underlying rate ( undix ). monetary policy would then face the same situation, albeit in reverse, as on so many occasions in the recent past. an attempt to counter the tendency by tightening