Even with an interval, monetary policy would more often than not aim to reach the mid-point of the interval. But it could make things easier if it takes quite a long time to achieve the target. And an interval may, as I said before, be a good way of communicating uncertainty about the future and about the effects of monetary policy. Other targets in addition to the inflation target? A question that has emerged now and again in the Swedish debate is whether it should be written into the law that the Riksbank, in addition to the price stability objective, should also have an objective for growth in the real economy. Normally, it is an objective for employment that debaters then have in mind. One usually talks of the central bank having a so-called dual mandate, including both inflation and the real economy. In practice, central banks that conduct flexible inflation targeting act and reason in a very similar way, regardless of whether  25  12  See Memorandum, Basis for Decision. Sveriges Riksbank. http://www.riksbank.se/Upload/Dokument_ riksbank/Kat_publicerat/Pressmeddelanden/2010/nr27_beslutsunderlag.pdf. BIS central bankers’ speeches  they have a statutory dual mandate or not when the real target is not explicitly expressed in numerical terms. 26 There is a risk that many of those who advocate a statutory dual mandate imagining that monetary policy would then be conducted in a completely different way to previously, and that it thereby would be able to contribute in some way or other to a lasting increase in employment.
If oil prices remain low, it may quickly become necessary to take a critical look at the scale of welfare schemes and public sector services, and it may also be necessary to increase taxes. If, later in the business cycle, measures are called for to curb unemployment, they should be designed to be readily reversible and in such a way that they do not erode government finances in the long term. Conclusion By way of introduction, I posed the following question: is our economy sufficiently robust to cope with the fall in oil prices without a new round of major structural adjustments? Our financial system is in a stronger position to cope with a new downturn than it was in the 1980s. We have avoided a debt bubble of the scale we witnessed last time. However, I am in doubt as to the financial industry’s long-term restructuring capacity. Norway must endorse the development of a new architecture for the global financial system. This is a demanding and long-term process, and we cannot expect all the problems to be solved over night. On the other hand, if we are to have any hope of a more stable and predictable world economy, the only real alternative is to enhance international codes for financial markets. We have observed that confidence in the krone is fragile. In order to restore confidence and maintain a stable exchange rate, monetary policy must be a credible anchor for expectations of continued low price inflation.