reassuring. indeed, the convergence of our three core measures around 2 per cent, as we forecast last year, has helped buttress confidence in our inflation models. our forecast now shows inflation rising modestly above 2 per cent due to temporary factors, and then easing back to about 2 per cent during 2019. in this respect, it is worth underscoring that our target is a range of 1 to 3 per cent and that the average rate of inflation in the last few years has been below the midpoint of the range. the third issue is wage dynamics. recent data have been encouraging. our summary measure of various wage series, called wage - common, shows that wage growth has picked up significantly in the last 18 months. we have noted before that we would expect wages to be growing by around 3 per cent in an economy operating close to capacity. we are approaching that zone now, although the latest figures have been boosted temporarily by minimum wage increases in some provinces. furthermore, governing council acknowledged that these data can be difficult to interpret after a prolonged period of labour market slack. for example, wages tend not to decline during periods of high unemployment as much as our models might predict, and when the economy recovers, there is a lag before average wages respond. all things considered then, we continue to believe that there are elements of excess capacity in the labour market, as well as the possibility of productivity - enhancing labour market churn, that will add to the economy ’ s capacity. fourth, governing council has been monitoring the data for evidence that the sensitivity of the economy to interest rates has risen with household indebtedness. this issue will take longer to assess, especially given that the housing market and mortgage lending have also been affected by the new mortgage guidelines. however, we did note that household credit growth has continued to moderate, an important signal that is consistent with the idea that households are beginning to adjust to higher interest rates and the new mortgage rules. some progress has been made on the key issues being watched closely by governing council, particularly the dynamics of inflation and wage growth. this progress reinforces our view that higher interest rates will be warranted over time, although some degree of monetary policy accommodation likely will still be needed to keep inflation on target. the bank will also continue to monitor the economy ’ s sensitivity to interest rate movements and the evolution of economic capacity. in this context, governing council will remain cautious with respect to future policy adjustments, guided by incoming data. with that,

" that adapts to variations in the supply of and demand for kronor following on from economic developments in sweden in relation to those in other countries. the exchange rate rate can vary in the short and also slightly longer term in a way that has only a weak link to developments in the real macroeconomy, for instance, it may weaken over a relatively long period of time. good economic base will strengthen the krona eventually however, the krona cannot drift away indefinitely. the longer it is undervalued and the weaker it becomes, the stronger the forces will become that protect against further weakening and work towards strengthening. we are a small open economy that has a lot of trade with our neighbours. when the krona is weak, it becomes profitable to invest in sweden. swedish equities, bonds, property, etc. should therefore ultimately appear attractive to foreign investors. in addition, exports will benefit and imports will be disadvantaged. increased tourism and the purchase of more expensive capital goods by foreign private individuals, such as cars and boats, also favour demand for the krona. when many factors eventually move in the same direction, the krona will strengthen and this could go quickly. but it is difficult to say exactly when and how much the krona will strengthen. if speculations of a continued decline for the krona have contributed to recent developments, the krona may strengthen relatively quickly once the turnaround occurs and investors take up new positions on the basis of the trend having been broken. the riksbank has no target for the exchange rate 2 / 4 bis - central bankers'speeches so what is the riksbank's role in this – what can and should we do? it is the riksdag that decides which exchange rate system sweden should have and it has chosen a system with a floating krona. the riksbank's responsibility in this system is to hold inflation low and stable. we therefore have a target for inflation, not for the exchange rate. but the krona is of course an important variable for us. it is always important for monetary policy, because the exchange rate affects the outlook for inflation. there is also research showing that the impact of the exchange rate on prices may be greater when inflation is high. in this way, it can be said that developments in the krona's exchange rate have become more important for the analysis work at the riksbank recently. when the krona is weak, it becomes more difficult to