is temporary and that there is reason to expect lower inflation as early as the late spring and summer. although, as i said earlier, this assumes that those setting prices and wages do not attempt to compensate themselves for the temporary price rise. all in all, it is a question of balancing the risks of, for instance, a weaker growth in the economy, against the risk that the upturn in inflation will have contagion effects. this is what the executive board must do at its monetary policy meeting on 17 march. chart 1 und1x including and excluding energy und1x und1x excluding energy sources : statistics sweden and the riksbank

and companies can also affect the price - setting and wage formation processes and thereby inflation. one purpose of a clear inflation target and a monetary policy governed by such a target is to firmly establish the inflation target with the general public. at the same time, one should remember that the riksbank is forced to take into account many other factors that influence price trends. these are often non - recurring factors, such as supply shocks in various forms, which are often difficult to predict. but above all it can be difficult to use monetary policy to prevent them having an impact on inflation. monetary policy has an impact with a time lag, and it does not always reach the source of such a price rise. for instance, a central bank cannot prevent oil prices rising in the wake of the concern over a possible war in the middle east. on the other hand, a central bank could of course try to quickly tighten demand in the country to push down prices in other areas and thus ensure the average rate of price increase remains in line with the target level. the focus on inflation 1 - 2 years ahead, entails monetary policy being conducted gradually, little by little, rather than a constant acceleration and braking, which would risk creating unnecessary variations in demand and which could in turn have a negative effect on production and employment. the focus on the coming 1 - 2 year period thus means that temporary rises or falls in the inflation rate can be tolerated. however, it is important that the riksbank is clear in its communication of whether it considers the rise to be temporary and when it expects it to subside. one - off shifts in price levels can have a more lasting effect on future inflation if, for instance, those involved do not believe that the rise is temporary, assessing that it will be lasting and thus wishing to compensate for the upturn. if this occurs, monetary policy must be used to intervene, even if the economic situation in itself does not provide cause for concern with regard to inflation, to prevent inflation taking a hold through expectations. the reason for this is quite simply that it is more costly in terms of reduced production and employment to force down inflation expectations once they have become established at a higher level rather than to prevent them rising. parallels between the current situation and 2001 plus 2002 let us take a look at the current situation and begin with the price rises. now, as in spring 2001, inflation has risen as a result of temporary factors pulling up the general level of prices. during 2001 mad - cow