we have not considered it possible to be more precise than this. of course, we are constantly examining our view in the light of new data and analyses. when we look ahead two years, there is no reason to change this view now ; it is important that no one misunderstands me here. but if the current trends for the labour supply persist, it is likely that we will have to assume in the longer term a potential growth rate closer to 2 per cent than 2. 5 per cent. thank you! fig. 1. essential outline, actual and potential gdp gdp time fig. 2. estimated production gap according to three methods per cent of potential gdp - 1 - 1 - 2 - 2 - 3 - 3 - 4 - 4 uc pf hp - 5 - 5 - 6 - 6 - 7 - 7 sources : statistics sweden and the riksbank fig. 3. productivity growth ( gdp per hour worked ) 1981 – 2001 per cent 4, 0 3, 5 3, 0 4, 0 3, 5 trend actual 3, 0 2, 5 2, 5 2, 0 2, 0 1, 5 1, 5 1, 0 1, 0 0, 5 0, 5 0, 0 0, 0 - 0, 5 - 0, 5 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 sources : statistics sweden and the riksbank fig. 4. public sector ’ s share of total hours worked, 1981 – 2002 per cent ( sliding average ) 32, 00 32, 00 31, 00 31, 00 30, 00 30, 00 29, 00 29, 00 28, 00 28, 00 27, 00 27, 00 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 source : statistics sweden fig. 5. labour productivity in trade and industry excluding telecom products, 1994 – 2000 per cent 6, 0 6, 0 trade and industry trade and industry excl. 32 according to sni 92 5, 0 5, 0 4, 0 4, 0 3, 0 3, 0 2, 0 2, 0 1, 0 1, 0 0, 0 0, 0 sources : statistics sweden and the riksbank fig. 6. growth in number of hours worked 1981 – 2001 per cent trend actual - 1 - 1 - 2 - 2 - 3 - 3 - 4 - 4 - 5 - 5 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98

per jansson : my view on inflation targeting speech by mr per jansson, deputy governor of the sveriges riksbank, at karlstad university, karlstad, 11 october 2012. * * * twenty years of a floating exchange rate i would like to begin by taking you on a trip back in time, twenty years ago to 11 october 1992. sweden and a number of other countries were then in the midst of a crisis that in many ways is similar to the one many countries in europe are now undergoing. the situation was critical. property and financial companies had gone bankrupt, the entire swedish banking system was rocked to its foundations, unemployment had begun to soar and public finances were drained. the fixed exchange rate was put under severe pressure and many assumed that sweden would do what it had done so many times before – adjust the value of the krona to get the wheels in motion once again. around one month earlier the finnish central bank had been forced to give up its defence of the exchange rate and let the markka float. one week later, on 16 september, the united kingdom and italy decided to give up the fight for sterling and the lira. the riksbank on the same date had instead raised its repo rate to 500 per cent in an attempt to stop the currency flows and the speculation against the krona. on 6 october, a statement of government policy declared that there was almost total support for the hard currency policy and that the prospects of success were good. we all know what happened. just over one month later, on 19 november, the riksbank was forced to give up the fight and the krona was allowed to float, or perhaps i should say sink. as i have understood things with hindsight, there was no clear plan in place as to how monetary policy would be conducted from then on. 1 and this was perhaps not so strange – with the exception of a couple of brief periods between the wars, sweden had had a fixed exchange rate for the past 120 years. so it was probably difficult to think along new lines. the aim also seems to have been that sweden would return to some form of fixed exchangerate system as soon as possible, and so the idea was to find some way of conducting monetary policy until then. inflation targeting has worked well, but has been criticised some countries, new zealand, canada and the united kingdom, had begun to apply a new type of monetary policy known as inflation targeting. this entailed setting a numerical