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STOCKHOLM, June 30 (Reuters) - Sweden's central bank should wait with tweaking its inflation target until a parliament committee has finished its overview of Riksbank policy rules in around two years, the financial watchdog said on Friday.
In May, the central bank proposed changing the inflation targeting regime to look at underlying rather than headline price rises and introduce a "variation band" around its 2 percent goal.
In a formal response to the central bank's proposal, the Financial Supervisory Authority said it could create volatility in interest rates and interest rate expectations if the Riksbank changes its target now and that were to be followed in a couple of years by another change mandated by parliament.
Reporting by Daniel Dickson; Editing by Simon Johnson