measures of underlying inflation to describe the trend rate of inflation and to justify the monetary policy decisions. our most commonly used measure, with the rather difficult to pronounce name of und1x, consists of the cpi adjusted for certain items that are affected by fiscal policy and monetary policy in a direct way. there are educational gains with using measures of underlying inflation. however, it can also create uncertainty as to how the inflation target is defined, even if we try to be clear about why a particular measure has been highlighted at a particular time. such experiences have given us reason to think about how the need for various adjusted inflation measures can be reduced. one possibility could be to make forecasts covering longer periods. for the riksbank the need to emphasise alternative measures of inflation growth has declined in that we have for some time now published forecasts of developments three years ahead instead of two years ahead. with a longer forecast horizon it is possible to illustrate more clearly when various shocks have effects that are temporary and how they dissipate over time without having any lasting impact on inflation. this makes it easier to explain whether or not the interest rate needs to be changed. 2 the target horizon and real stability considerations when the inflation target was announced in january 1993, the riksbank also formulated a tolerated deviation interval of ± 1 percentage point. one purpose of this was to illustrate that it is not suitable or even possible for monetary policy to maintain inflation at exactly two per cent all of the time. changes in the policy rate, known as the repo rate in the riksbank ’ s case, are a blunt instrument with regard to steering inflation in the short term. it takes time before interest rate changes have an effect and monetary policy must therefore be based on forecasts of the inflation rate a couple of years ahead. in addition, there is uncertainty over how the economy functions. it is therefore impossible to parry all shocks that affect the economy and so, temporary deviations from target will arise. the tolerance interval also provides scope for temporary deviations from target that may be justified with reference to the stability of production and employment. let us say that a shock occurs, which makes inflation deviate from target. by not aiming to restore inflation to target as quickly as possible, scope is created to dampen fluctuations in, for instance, growth and employment. however, for the inflation target to retain its credibility, the deviations cannot be permitted to become too large or to last for exceedingly long periods. to

are working in a world that is constantly changing and always making new demands of us. it is only natural that we must always work on refining and improving our strategy and framework. openness, clarity and efficient communication are important guiding principles in this process. it is also a strength to be able to learn from others ’ experiences in the monetary policy field. gatherings like this are excellent opportunities to do just that. perhaps the swedish experiences of monetary policy with an inflation target may in some way be useful to other countries planning to introduce an explicit inflation target? i hope so! thank you.