to enjoy confidence and legitimacy. to summarise, i consider it extremely important that independent central banks should be assessed. to ensure that this is carried out in a purposeful manner, the central banks ’ forecasts and other information on which decisions are based should be well - documented and reported openly. it also requires a reasonably coherent explanation as to why the forecasts look the way they do. this means that we need to constantly develop our methods for making and assessing forecasts. however, it also requires that an institution actively commits itself to making thorough analyses of the information compiled so that the assessments and debate can be serious and constructive. what happens if low inflation persists? not only the riksbank, but also several other central banks have in recent years faced a situation where the economy has grown strongly, while inflation has been below target, despite very expansionary monetary policy. let me therefore go on to discuss an important issue that has arisen due to developments in recent years, namely how to deal with a situation where structural changes contribute to inflation remaining low over a long period of time. in sweden, the upswing in world trade has contributed to strong growth in swedish exports. over the past year, domestic demand has also developed strongly, partly due to stimulation from expansionary monetary policy. at the same time, inflation has been kept down by high productivity growth and weak growth in import prices. this is partly related to developments in economic activity. however, there also appear to be factors of a more structural nature behind the low inflationary pressure. this is probably to some extent connected to the fairly comprehensive investment in new technology. however, it is clearly also largely concerned with the effects of increased global competition. our analyses thus indicate that the low inflation rate has in many cases been the result of a number of changes in the supply side of the economy. our forecast is that growth in the swedish economy will remain high over the coming years. we also envisage inflation rising as capacity utilisation increases. our most recent inflation forecast indicates that inflation will approach the target a couple of years ahead, on condition that the repo rate is gradually increased. however, forecasts are of course uncertain. in addition to the usual uncertainty regarding developments in economic activity, it is very difficult to determine the durability of this type of structural change. is, for instance, the upswing in productivity we have seen in recent years only temporary or is it a more permanent improvement? there is a discussion that

. against this background, let me just say a few words about the monetary policy strategy we have chosen in sweden and the changes we have recently made to our analysis framework. the strategy has of course developed gradually during the period we have applied inflation targeting and is primarily the result of practical experiences of inflation targeting in sweden and in other countries. new findings in academic research in this field have also had significance. the riksbank ’ s monetary policy strategy in sweden, the riksdag ( the swedish parliament ) has delegated the responsibility for monetary policy to the riksbank, through the sveriges riksbank act, which came into force in 1999. according to this act, the objective of monetary policy is to maintain price stability. the riksbank has specified this as an inflation target, which states that the annual rate of change in cpi should be 2 per cent, with a permitted deviation of ± 1 percentage point. the riksbank shall also promote a safe and efficient payment system. the preliminary work to the sveriges riksbank act also makes clear that the riksbank as a public authority under the riksdag, without neglecting the price stability target, should support the general economic policy objectives of sustainable growth and high employment. the sveriges riksbank act also established increased independence for the riksbank. since 1999, decisions on the repo rate have been made by the executive board of the riksbank and the members of the board are expressly forbidden from seeking or receiving instructions when carrying out their monetary policy tasks. price stability is thus the objective of swedish monetary policy, but like norges bank and most other inflation - targeting central banks we conduct monetary policy that also to some extent takes into account activity in the real economy. the fact that the interest rate is often adjusted in relatively small and predictable steps can partly be regarded as an expression of this. if the aim had instead been to bring back inflation to the target as quickly as possible, without any other considerations, it is probable that larger and more frequent adjustments would have been warranted. a more gradual change in the interest rate can also be justified by the uncertainty of the forecasts and statistics. monetary policy is normally aimed at attaining the inflation target within two years. this horizon is justified by the fact that monetary policy's impact comes after a time lag, but also by the desire to contribute to subduing fluctuations in activity in the real economy. by aiming to allow