Palmqvist, Stefan (2013), “Konsumentprisindex i Sverige och Kanada är inte så lika” (The CPI in Sweden and Canada are not so similar) (In Swedish) Post on the blog Ekonomistas, http://ekonomistas.se/2013/11/20/konsumentprisindex-i-sverige-och-kanada-ar-inte-sa-lika/. Reserve Bank of Australia (1998), The Implications of Recent Changes to the Consumer Price Index for Monetary Policy and the Inflation Target. Reserve Bank of Australia Bulletin, October. Reserve Bank of New Zealand (1999), Minor Technical Change to Inflation Target. Press release, 28 October. The Riksbank (2010), The Riksbank removes the tolerance interval from its specified monetary policy target Memorandum, Basis for Decision, 31 May 2010, http://www.riksbank.se/Upload/Dokument_riksbank/Kat_publicerat/Pressmeddelanden/2010/ nr27_beslutsunderlag.pdf. The Riksdag (2014), Committee on Finance appoints top names to evaluate the Riksbank's monetary policy. Press release, 17 June. Skingsley, Cecilia (2015), Inflation-targeting policy after the financial crisis. Speech at Almega, 22 May. Svenska Dagbladet (2015), “Professorn varnar för låga räntan,” (Professor warns about low interest rate) (In Swedish) 18 November. 10  BIS central bankers’ speeches  Figure 1. Stable Swedish economy  Note: The yield differential refers to 10-year government bonds, monthly data. Sources: Thomson Reuters and the Riksbank  Figure 2. Major direct impact of interest rate changes on CPI inflation  Note: Weighted mortgage rate is chained in December 2014 due to an altered measurement method. Sources: Statistics Sweden and the Riksbank  BIS central bankers’ speeches  11  Figure 3. CPI inflation varies a lot more than CPIF and HICP inflation  Note: The CPIF is the CPI with a fixed mortgage rate. HICP refers to the EU-harmonised index for consumer prices.
If there were a tolerance band, inflation of just over 1 per cent, or below 3 per cent, instead would be “tolerable” if unforeseen events meant that inflation ended up there, but it would not be something to consciously aim for. The idea that many commentators seem to have is that a target range would mean the Riksbank would feel less forced to bring inflation up to 2 per cent, which in turn would mean that monetary policy would not need to be as expansionary and the risks linked to such a policy could be mitigated. Difficult to pursue another policy even with an interval I would like to point out here, without commenting on the pros and cons of a target range in general terms, that this idea appears to be based in part on a misunderstanding of the motives behind the Riksbank’s policy. The reason the Riksbank is eager to get inflation to rise is not that we have a rigid fixation with achieving exactly 2 per cent inflation all the time. It is due to the fact that the period in which inflation has been below the target has gradually become longer, and that long-term inflation expectations have shown a falling trend and still remain below the target.