is assumed to have a downward effect on cpi inflation of 0. 7 percentage points in the current year. this, however, constitutes a one - off shift in the price level, not an effect that alters inflationa€™s trend. all else equal, 12 months later the rate of inflation will shift back up to the earlier level. note, however, that inflation measured with und1x is not affected ; the rate remains stable around 2 per cent throughout the period. neither are any monetary policy measures taken in this example, as long as inflation expectations do not change. the reason is that by the time a repo rate cut would elicit effects, the tax changes would no longer be affecting the inflation rate. this is evident from the absence of any effect on underlying inflation. initially, moreover, the interest expenditure item in the cpi would move in the [UNK] direction and lower cpi inflation even more. if medium - term inflation expectations were to be influenced, on the other hand, monetary policy action might be called for. an adjustment of expectations in the light of the tax change has consequences for underlying inflation, so that inflation may be below the target somewhat further ahead. 9. permanent and transitory inflation a schematic account initial position economic development stable, underlying inflation undinhx - in line with the target. undinhx good coffee harvest and increased supply of oil. these commoditiesa€™ prices fall sharply in july year 0 and are then stable at the new, lower level. a€¢cpi - inflation is lowered for a period of twelve months and so is und1x. a€¢but underlying inflation measured with undinhx remains stable. cpi och und1x year example 3 : falling commodity prices from the earlier examples it might be supposed that und1x is an index of underlying inflation that would be preferable to the cpi as a basis for the formulation of monetary policy, so that policy ought to be appraised strictly in relation to this indicator. however, even und1x may be affected by transitory shocks. let us assume that the price of oil suddenly falls and then remains stable at the lower level. underlying inflation measured with und1x will then fall as much as the cpi. undinhx, on the other hand, remains stable around the 2 per cent target. after 12 months, however, the first two measures of inflation return to 2 per cent. this follows from the assumption of a one - off

of 2001 there were more than 3 million bank customers subscribed to internet banks. for the banks the electronic payments entail considerable opportunities for rationalisation, probably to a much greater extent than could be foreseen just a few years ago. some time ago i met the manager of a banking office in stockholm who told me that he now had the same number of employees as five years ago, but his turnover was almost 50 per cent higher. this was largely due to the fact that the companies ( including small and medium - sized companies ) that had earlier been serviced by the bank could now carry out many of their transactions themselves via the internet bank, which simplified their work and facilitated cash management. the companies could, for instance, with one click ( as we say nowadays ) pay all wages through a paperless transfer from the company ’ s account to the employees ’ accounts and at the same time do the bookkeeping and pay slips, all without the long paper strips that needed to be manually checked. already today, the internet banks contain much more than merely the opportunity to make payments and check one ’ s account balance. one function on the internet that will probably lead to increased competition within the finance sector is the existence of companies that offer price comparisons. there are, for instance, several independent companies on the internet today which enable a simple comparison of mortgage costs or provide assistance in finding the most beneficial insurance policies. competition will increase with regard to share trading, mutual funds, insurance and mortgages, even from abroad. one reason for this is that the internet will cause a reduction in entry barriers, i. e. that the costs connected with starting a business and achieving critical mass with regard to customers will not be as high as before. new companies today do not need to establish far - reaching office networks, which is proved by companies such as skandiabanken and companies known as internet stockbrokers. finally, it is perhaps worth pointing out that it in the financial sector does not merely consist of the internet. many of the instruments that are currently traded in the markets, particularly derivative instruments such as options and swaps, are completely dependent on modern information technology to be priced and traded at all. as derivative instruments are mainly used to buy and sell financial risks in a cost - efficient manner, it is possible to say that it comprises a base for modern financial risk management, as it is put into practice on dealers ’ tables around the world. it is also a necessary condition for the methods used