A visit to Stockholm recently confirmed our optimistic outlook on the Swedish economy. While we are leaving our growth forecasts unchanged, we are lowering our inflation numbers for 1996 and 1997 and making major adjustments to our interest rate targets on the back of economic and political developments in the last few weeks. These forecasts remain above consensus despite the upward revisions among market participants. As we have been expecting, there are increasing signs that growth is broadening out beyond the export sector. The National Debt office has yet again revised this year's PSBR to between SKr 20-30 billion.
Monetary policy is likely to be guided by the incremental data.
This is the major revision we are making in our forecast. Hence, if the wage round plays out as we expect. Obviously, even with our aggressive forecast, we are maintaining a risk premium to take into account Sweden's shorter track record on currency stability. We have to admit that the recent bond market outperformance caught us by surprise. There is no doubt that the global rally and EMU optimism accounted for most of the Swedish performance.