be a tolerance band surrounding this target of 1 percentage point both above and below. 14 the aim was to clarify that the riksbank does not have the ability to control inflation exactly in the short term, but that it also aims to limit deviations from the target – that it does not intend to “ tolerate ” deviations greater than 1 percentage point. the size of the interval was determined by what intuitively appeared to be reasonable. it was not possible to rely on any past experience as the monetary policy regime was entirely new and inflation had varied considerably during the old regime which had a fixed exchange rate. the riksbank expected that inflation would now vary less, but was unsure as to how much. it could be argued that wage formation should be based on inflation always being 2 per cent, as periods below and above the target should cancel each other out in the long term. however, if inflation deviates significantly from the target for a long time, it can be difficult for wage setters to stick to this. therefore, wage formation would be facilitated if the inflation target were formulated in term of cpif or hicp inflation rather than in terms of cpi inflation. until 1999, when the executive board was established, monetary policy decisions were made by the general council of the riksbank. bis central bankers ’ speeches the interval remained a part of the monetary policy framework for a long time, but was finally abolished in 2010. the reason for this was that the riksbank assessed at that time that it had fulfilled its role and was not serving any practical function. in the memorandum published in connection with the decision, it was noted that : “ there is considerable understanding for the fact that inflation commonly deviates from the target and that the deviations are sometimes larger than 1 percentage point. inflation can thus be outside the tolerance interval without threatening the credibility of the inflation target. such deviations have proved to be a natural part of monetary policy. ” 15 so as a few years now have passed, it may be justified to evaluate the period where there has been no interval. personally, i am not entirely sure that it has been as trouble - free as the riksbank expected, even though i too thought that the decision to remove the interval was quite natural when it was taken. debate about the interval – but a different kind than before? the question of whether the inflation target should be surrounded by an interval has recently gained some attention again in the swedish debate. there appears to be differing views on

one thing is certain, no matter what is decided. the most important contribution that a central bank can make to economic well - being of households and businesses is the achievement and maintenance of price stability. … the only question, as always, is whether it can be delivered in an even more effective and reliable manner ”. 16 thank you. see, yehoue, etienne b. ( 2012 ) : “ on price stability and welfare ”, imf working paper no 12 / 189. see murray, john ( 2006 ) : “ future trends in inflation targeting : a canadian perspective ”, presented at the conference co - sponsored by the new york association for business economics and the canadian consulate general, new york, february. see murray, john ( 2010 ) : “ re - examining canada ’ s monetary policy framework : recent research and outstanding issues ”, remarks before the canadian association for business economics, august. bis central bankers ’ speeches