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With regard to the Bank of England, their Inflation Report published in August (Bank of England 2010a) contains a forecast that is also based on the policy rate following market expectations, where inflation falls slightly below the target in two years’ time, and GDP growth is close to its historical average, and the GDP level is still lower than before the crisis. This and the minutes from the meeting in October (Bank of England 2010c) do no indicate that the Bank of England will follow a policy rate path that is higher than market expectations. 7  7  After the Riksbank’s monetary policy meeting the Inflation Report and minutes from the meeting in November have been published (Bank of England 2010b, c). Neither do they indicate a policy rate path above market expectations. BIS Review 158/2010  9  If the statements and signals from these central banks indicate interest rate paths in line with or below market expectations, it is not reasonable, in my opinion, to assume – as the main scenario does – that foreign interest rate paths will be clearly above market expectations. In this situation it is more reasonable, at the very least, to proceed on the basis of market expectations according to implied forward rates. One reason for assuming higher future policy rates than the market pricing may be that these abnormally low nominal and real interest rates are not compatible with the Riksbank’s usual models and with the historical patterns for how foreign inflation, GDP and interest rates interact.