should govern our choice of future path? we are now in april 2016 and i judge that we have largely succeeded in our efforts. growth has become much higher than expected, although this is not merely due to monetary policy. the trend towards declining confidence in the inflation target has turned around in that inflation expectations have begun to rise again. the monetary policy conducted is far from uncomplicated. in a world of minus rates it is more difficult to assess what impact the interest rate decisions will have on different channels, that is, how the transmission mechanism will work. it is also difficult to assess the stimulation effects of the bond purchases. 2 moreover, the riksbank has been clear that low interest rates increase indebtedness among households in a way that increases vulnerability in the swedish economy. but most of all, i feel that our monetary policy is successful and better than the alternative. the inflation target would have risked losing its role as anchor for pricesetting and wage - formation if we had not cut the repo rate in 2014 and 2015. with regard to my thoughts on going forward, i would like to begin with the monetary policy meeting on 10 february. the report presented then stated that resource utilisation in sweden was assessed to be at a normal level. the members of the board agreed that the important thing for monetary policy is for the trend in inflation to come closer to the target and to avoid weakening confidence in the target. the upturn in inflation is expected to continue to be fitful and there may be surprises along the way. whether, and if so how, monetary policy will react depends on the causes of such surprises and how they are deemed to influence the outlook for inflation. we were also agreed that we shall maintain a high level of preparedness for action, even between the ordinary meetings, in case further measures are needed to safeguard confidence in the inflation target. exactly how tolerant we are with regard to different outcomes may vary somewhat on an individual basis, which is natural on a committee. in my contribution to the debate at the meeting i wanted to say that i now have a greater tolerance for setbacks, in that we now have a more favourable situation in sweden. i do not see this as advocating a new monetary policy strategy for the riksbank. instead i would describe it as a natural consequence of the change in the economic situation and inflation prospects. when the analyses of data point to resource utilisation normalising and inflation showing a trend towards the target, it is

problems in ltcm also aroused fears of a considerably more serious scenario where banks in the industrialised countries became so cautious about granting credit that this would paralyse global economic activity. as the signs of an international slowdown became increasingly clear and were accentuated by the growing turbulence in financial markets, the riksbank revised its assessment of the swedish economy and the path of inflation. this warranted some easing of the monetary stance. in november the repo rate was therefore lowered in two steps, from 4. 10 to 3. 60 %. in the december inflation report it was still considered that in one to two years ’ time, both the change in the cpi and the underlying rate of inflation would be below the riksbank ’ s 2 % target for price stability. on 16 december the repo rate was therefore lowered another 0. 2 percentage points, to 3. 40 %. after this adjustment, responsibility for the future formulation of monetary policy passed to the riksbank ’ s new executive board, which would be taking over from the turn of the year. strong finish to 1998 most signs suggest that activity in the swedish economy was fairly strong in the latter part of 1998. gdp figures have still to be published but the available statistics point to a good fourth quarter. the strong trend is mainly due to the expansion of domestic sectors, not least in retailing. the development is not dramatic but statistics sweden does report a 12 - month increase in retail sales of 3. 3 % in november. according to the wholesale & retail research institute, this was followed by a good christmas season. the contribution to growth from investment also seems to have been favourable. as a result of all this, employment is rising more markedly than in recent years and this in turn led to a drop in unemployment during 1998. current inflationary pressure is still low. the rate of cpi inflation remains negative and the december out - turn was lower than expected : the level of consumer prices dropped 0. 6 % from december 1997, as against the fall of 0. 3 % that had been foreseen in the riksbank ’ s latest inflation report. however, this is partly a consequence of the riksbank ’ s repo rate cuts, which have brought house mortgage rates down. so while we lowered the repo rate in the light of favourable inflation prospects, the cuts have had the initial effect of depressing cpi inflation even more. this has been accompanied by a further decline in commodity prices. but underlying domestic inflation