As the basis of an inflation-targeting policy is that the long-run inflation expectations are anchored around the target, this development has gradually made it more important to bring up inflation. The Riksbank has therefore needed to focus more and more on its main task, to maintain confidence in the inflation target, while the scope for taking other issues into consideration has become more and more limited. It is these considerations which form the basis for the policy being pursued by the Riksbank today. It is not a question of a rigid fixation with achieving exactly 2 per cent all the time. On the contrary, the Riksbank normally demonstrates a considerable degree of flexibility when it comes to how fast the target should be met. There is a limit to this patience, however. Difficult to maintain confidence simply through communication I believe the critics take the importance of maintaining confidence in the inflation target far too lightly. This argument is often not considered at all, with everything focusing instead on the Riksbank needing to stop the increase in household debt and housing prices by raising the interest rate. If confidence in the inflation target is even mentioned at all, the idea seems to be that it is something that should be maintained by the Riksbank communicating that even though it intends to continue to allow inflation to undershoot the target for some time to come, it will eventually bring inflation back up to the target at some point in the future.
This will make our intentions regarding future monetary policy as clear as they can be. In my opinion, this new way of working reduces the need for signalling prior to the monetary policy meetings. Objections of principle… It is also possible to raise issues of principle regarding when and how one should signal. The signalling has sometimes been a question of wanting to communicate that we have had a slightly different view of how the interest rate should be set at the next meeting than the market has expected. In these situations one can say that we have preferred to prepare the market by signalling a few weeks before a monetary policy meeting rather than to risk surprising them when the decision is announced. But it is not necessarily the case that much can be gained by “fine tuning” expectations over the course of a few weeks. Although this system has meant that we have sometimes been able to avoid strong reactions and indignant comments in connection with the actual interest rate decision, we have nevertheless had roughly the same reactions when we have signalled the probable interest rate decision a few weeks earlier. The question is then what value the signalling has had. …not least because we are several members who must agree Many questions regarding the signalling are connected to the fact that we are a group of persons making interest rate decisions. The Executive Board of the Riksbank is what is usually known as an individualistic committee 8 .