to miss a certain tv or radio programme? increasing numbers of us subscribe to streaming music and film services, read the news on the internet instead of in paper newspapers, listen to podcasts and use catch - up tv services and youtube channels. it ’ s quite fun being a consumer these days. also on the other side of the economy, the producing side, can we see markets being reshaped and both the number and nature of jobs being changed. my sector, the financial system, and my workplace, the riksbank, are also being affected by these changes. in our monetary policy assignment of maintaining price stability in swedish kronor, specified as inflation of around 2 per cent, we need to understand not only cyclical developments but also structural transformations in the economy. this knowledge forms a precondition if we are to be able to make good forecasts and calibrate a well - balanced monetary policy, thereby fulfilling our mandatory task. to make good forecasts, we need models, and models assume that economic relationships are stable. it therefore becomes complicated when structural changes delay or even transform old relationships. if important structural changes have occurred, they turn up as so - called shocks in the models. for example, new and better working methods should entail a positive shock in productivity. another structural change, for example increased e - commerce, means that competition increases, putting pressure on companies ’ profit margins. however, when data on productivity and companies ’ profit margins is studied, it is difficult to observe larger changes. productivity growth in recent years cannot be described as remarkably high. 1 in turn, this has an effect on wage development, which i shall return to. my point, however, is that technological shifts do not necessarily change the way the economy works. but it is nevertheless clear that technological breakthroughs can push forward changes in what have historically been fairly stable operations and open them up for new participants. for example, technological developments in society have contributed to the use of cash, the money the riksbank offers society, going into decline. if the present trend continues, cash could actually be phased out as a means of payment in a few years, as many banks and a growing number of retailers no longer offer services involving cash. sweden is a world leader in developing electronic means of payment. this is positive. but, at the same time, the public sector in a wide sense needs to ensure that 1 florian maican and matilda orth ( ekonomisk debat

lars nyberg : the riksbank and the inflation target speech by mr lars nyberg, deputy governor of the sveriges riksbank, at nordea, copenhagen, 19 may 2005. * * * thank you for the invitation to come and speak at nordea about swedish monetary policy! today i shall mainly concentrate on the content and interpretation of our inflation target. one special aspect of the inflation target and monetary policy that i shall discuss towards the end of my speech is the household sector ’ s growing debt burden and house price increases. a clear framework for monetary policy sweden is currently enjoying what is usually described as an economic boom. growth last year was almost 3. 5 per cent, one of the highest figures in 30 years, and households ’ real disposable incomes are expected to rise by around 3 per cent this year. inflation is at its lowest point in living memory, as are interest rates. however, there is a problem. employment has not risen at all as most forecasters, including the riksbank, expected. we therefore find ourselves in a discussion of whether interest rates should possibly be even lower. given the intensive debate on this subject, i consider there is good reason to describe and discuss our monetary policy framework and its significance for the way we work. it is well known that one of the riksbank ’ s fundamental objectives since the beginning of 1993 has been to maintain price stability. this is inscribed in the sveriges riksbank act of 1999 and is thus a parliamentary decision. however, it was left to the riksbank to determine the practical application of this objective. our choice was to specify a quantitative target for the inflation rate : the annual increase in the consumer price index, cpi, should be two per cent with a tolerated deviation of + / - one percentage point. the purpose of a tolerated deviation is to make it clear both that inflation will deviate from the two per cent level from time to time and that the riksbank's aim is to limit such deviations. the target is symmetrical, which means that it is as undesirable to have an inflation rate below the target level as above it. many other countries also conduct monetary policy where they have formulated a price stability target in one way or another. the euro countries have chosen to maintain inflation at a level close to, but below, two per cent, in other words, a non - symmetrical target. the united states has taken a different view and chosen a