run sustainable rate. to estimate the long - run sustainable unemployment rate is not easy, but it is much easier than estimating a long - run sustainable path for production. estimates of the long - run sustainable unemployment rate can also be examined and evaluated, while estimates of a long - run sustainable path for production will in practice become more or less impossible to verify. with regard to specifying price stability, what measure of inflation should be used? there is a generally - accepted principle that looking a few years ahead, cpif inflation is the relevant operational measure of inflation. the reason for this is that in the short term, cpi inflation is affected directly by the riksbank ’ s own repo - rate adjustments and monetary policy should not react to these temporary effects. cpif inflation does not include these effects. in the longer run, these effects largely cancel one another out, and then it is cpi inflation that is relevant. 4 the point of using cpif inflation as the operational measure is thus to best stabilise cpi inflation in the longer run. in the longer run, monetary policy should therefore be assessed with regard to how well it stabilises cpi inflation around the target and unemployment around a long - run sustainable rate. the employment gap is equal to the labour - force gap ( the “ participation ” gap ) minus the unemployment gap, where the “ gap ” refers to the difference between the actual rate and the long - run sustainable rate. if the labour force gap is not so small that it can be ignored, the employment gap can be stabilised by more precisely stabilising unemployment around the sustainable unemployment rate minus the labour force gap. this is entirely in line with the recommendations in the assessment made by goodhart and rochet ( 2011 ), and which the riksbank agreed with in its consultation response. bis central bankers ’ speeches a more expansionary monetary policy gives better target fulfilment my view of monetary policy implies that at each monetary policy meeting one should choose the repo - rate path that with the corresponding forecasts for inflation and unemployment best stabilises inflation around the target and unemployment around a long - run sustainable rate. it should not be the case that a lower or higher repo - rate path leads to better target fulfilment for both inflation and unemployment. in other words, it should not be the case that inflation and the inflation forecast are below the target while unemployment and the unemployment forecast are above a long - run sustainable rate. based on norwegian

##ising argument ” in the minutes of the monetary policy meetings and svensson ( 2011 ). “ in the opinion of the government, a delegation of monetary policy to an independent riksbank cannot take place unless the objective of the activities is clear. an independent riksbank must therefore be given a democratically - anchored objective for its activities. if no objective is formulated, there would be scope for an arbitrary conduct of monetary policy. … bis central bankers ’ speeches i therefore consider it important that monetary policy is conducted in a clear and comprehensible manner so that it can be evaluated easily and fairly. at present, the riksbank makes a qualitative assessment of resource utilisation based on a number of different measures. this contributes to making the justification for the monetary policy decisions unclear and it also makes it more difficult to assess the riksbank and hold it accountable. i thus instead want to focus on stabilising unemployment around a long - run sustainable rate and not on trying to stabilise a number of other, quite shaky measures of resource utilisation in the economy, such as the output gap. compared with other measures of resource utilisation, unemployment has a stronger link to household welfare, is better understood and more familiar to the public, is measured often and with fewer errors and is seldom revised. the fact that other measures of resource utilisation are not appropriate as targets for monetary policy of course does not prevent them from playing an important role as indicators when assessing inflationary pressures and constructing inflation forecasts. nor do i see that there is any support for a qualitative assessment of resource utilisation instead of a quantitative, measurable target fulfilment. in economic policy it is now wellknown that targets must be measured quantitatively to obtain sufficient weight and to be fulfilled in practice. “ what is measured gets done, ” as they say. this is why there is an inflation target and why fiscal policy endeavours to have measurable surplus targets in public finances. it is thus important to have a measurable, quantitative target fulfilment not just for inflation but also for resource utilisation, and then in the form of unemployment. monetary policy should not focus on financial stability as there are better instruments with regard to the view that monetary policy should also aim to limit growth in mortgage lending and more generally to maintain financial stability, i would like to state the following : the policy rate is a blunt, indirect and inappropriate means of