This is mainly because it is sometimes claimed in the general debate that the Riksbank and other inflationtargeting countries have bound themselves too tightly to a particular model and that a more “pragmatic” policy system would give better results. My conclusion is that our method of working is  BIS Review 11/2005  7  sufficiently flexible to manage the necessary balance. As I see it, there are major advantages to a system like ours, with a clear target, publication of the background data, a policy rule, etc. It provides our activities with stability, both at the staff level and in the Executive Board’s discussions and communications. We are also forced to systematically examine all new ideas and issues that arise against the framework we apply, which has proved an intellectually fruitful exercise. However, what I have tried to show here is that the methods we now use can sometimes enable us to produce more interesting data for monetary policy and to describe our considerations in a more pedagogical manner. They can make it easier to demonstrate the flexibility of the inflation-targeting regime we work with. Whether this will then have an impact on the monetary policy debate in Sweden, and ultimately on the policy conducted, is a very difficult question that only the future can answer.
Before a monetary policy decision the Bank makes clear whether it expects inflation to deviate from the target or not, given the current interest rate level. If the forecast is above or below target it shows clearly that there is reason to consider whether the repo rate needs to be changed. The framework applied by the Riksbank has been the established practice in inflation-targeting countries. But as early as the mid-1990s the Reserve Bank of New Zealand, for example, opted for a  2  The volatility, measured as the standard deviation of GDP growth, was 1.9 percentage points during the period 1970-1992. Since 1995 the corresponding standard deviation has been 1.3 percentage points. 3  See Andersson, M., Dillén, H. and Sellin, P., ”The yield curve and the Riksbank’s signalling”, Sveriges Riksbank Economic Review 3, 2002, 5-19. BIS Review 11/2005  3  different method, publishing forecasts based on the interest rate path that they thought gave the best target fulfilment. Our academic advisers have also repeatedly said that we should prepare forecasts based either on how the market expects interest rates to evolve or that we, as in New Zealand, should work out what interest rate path is consistent with reaching the inflation target.4 Against this background we at the Riksbank have of course discussed over the years the question of what importance we should attach to different interest rate assumptions in our internal work and when we publish forecasts.