of the recommendations are aimed at the riksdag and the government and concern the forms for the monetary policy debate and the appointment of the members of the executive board. as these recommendations are not directed at the riksbank, i will refrain from commenting on them. with regard to the recommendations aimed at the riksbank, i shall first comment on some suggestions on which i agree with the authors. this applies, i can say now, to most of their suggestions. i will then also take up a couple of points on which i do not entirely agree with the conclusions drawn by the authors. one of the recommendations given is that the riksbank should make it clear in its inflation report that the flexibility of our inflation - targeting policy means that we attempt to subdue fluctuations in both inflation and the real economy. this is a point i agree with, but in my opinion we have actually already done so. with effect from the second inflation report this year, we have a special box explaining how the riksbank has scope when setting interest rates to give consideration to developments in both inflation and the real economy. the box is an extract from a document entitled “ monetary policy in sweden ”, which we published in may this year. the fact that inflation targeting gives consideration to the stability of both inflation and the real economy is moreover something we have long emphasised in speeches and other forms of communication. however, it is probably fair to say that we have gradually become clearer on this point, as we have learnt more about how inflation - targeting policy should be conducted. another recommendation in the evaluation is that the riksbank should base its forecasts on its own assessment of which repo rate path is appropriate ; that is, that we should take a step further compared to our current method. at present, we base our forecasts on the development of the repo rate expected by the financial markets. professors giavazzi and mishkin give several reasons why they advocate that the riksbank should present its own interest rate forecasts. perhaps the most important reason is that this would show most clearly what the riksbank ’ s own expectations of future monetary policy are. this would make it easier for companies and households to plan for the future. this point of view is easy to agree with, and i have expressed similar thoughts myself in various speeches. we are currently considering and working on how this might be achieved. compensating for earlier deviations from target as i mentioned to begin with

giavazzi and mishkin, will never be considered. but we do need further analysis and debate before this can be considered in sweden. monetary policy and house prices another point where i have some doubts is whether house prices should be taken into account in monetary policy. the specific recommendation given in the evaluation is that the riksbank should clarify that house prices, like other asset prices, are not independent targets for monetary policy. in my opinion, this is a message that we have tried hard to convey recently, which has also been noted in the evaluation. i and other members of the executive board have explained, for instance, in several speeches that if prices in the housing market have had an effect on our interest rate decisions, this has not been a reflection of the inflation target being downgraded in any way or that we now have a special target for house prices. the reason is that we believe this the best way to safeguard what we have been set to safeguard – stability in the real economy and inflation. it is claimed in the evaluation that the riksbank was initially unclear with regard to the reasons for allowing house prices to affect interest rate decisions and that this meant some people had interpreted it to mean that we had introduced a further target in addition to our inflation target. i believe there is some truth in this criticism. we could probably have been clearer at an earlier stage than we were regarding the reasons for taking house prices into account in our interest rate decisions. then we would perhaps also have been able to avoid some of the misunderstandings that have evidently arisen. now i believe that the criticism made in the evaluation concerns not only to what extent we have been unclear about whether we regard house prices as an independent target – which we accordingly do not. it also appears to stem from the authors having a somewhat different view than the riksbank regarding how house prices should be considered in monetary policy. the authors argue that monetary policy should react to a rapid price increase in the housing market only if such a price increase is expected to lead via normal channels to problems such as overheating and excessively high inflation. this method of reasoning is not without problems. a rapid increase in house prices and lending to households may entail risks in the long term, which are difficult to quantify and capture in conventional forecasts for the economy a couple of years ahead. if prices and the increase in borrowing were to some extent based on unrealistic expectations of how house prices and interest rates will develop in