Also, the world market price of oil has moved higher than expected. Thus far, the stance of monetary policy has been based on the assumption that the rise in energy prices will be temporary. We have refrained from raising interest rates despite inflation being considerably higher than 2 per cent at times. An alternative way of explaining our approach is to say that we have focused on underlying, demand-driven inflation. Should energy prices remain elevated for a long period or continue to increase, inflation will of course exceed our forecasts thus far. This could have other implications for monetary policy if it were to have a marked impact on cost levels and begin to affect inflation expectations. The highly irregular developments in electricity prices are a considerable problem for many decisionmakers in the economy, not just for forecasters of inflation. A comparison of electricity price developments in Sweden and the euro area speaks volumes (see Chart 4). These developments raise important questions about how the electricity market functions, questions that concern both competition and the conditions for the production of electricity. Summary of the outlook Even when taking into account the factors I have just discussed, the outlook for economic activity and inflation has not changed much since August. The upturn in the US appears to be slightly more evident, with less risks of a setback. In Europe, the outlook is instead somewhat weaker. For Sweden, it seems likely that the economy will experience a rather normal recovery next year.

This development positively contributes to the global sukuk market by promoting greater inter-linkages and integration within the international Islamic financial system. Such innovative sukuk products that are universally acceptable would be able to link Islamic financial institutions from different jurisdictions, forming a bridge to strengthen the relationship of the international Islamic financial market as well as the investment and trade links between regions. With the internationalisation of Islamic finance, interest in Islamic finance is indeed no longer limited to Muslim nations and communities. Increased liberalisation that is initiated in this decade has facilitated the internationalisation of Islamic finance which sees Islamic financial institutions venturing beyond their domestic borders and capacity. More than 600 Islamic financial institutions now operate in more than 75 countries. In Malaysia, there is a greater foreign institutional presence and substantial foreign participation in Malaysia’s Islamic financial system. Similarly, there has been an increased of foreign participants to raise and invest funds in Malaysia’s financial markets. The global sukuk market, growing at an average annual rate of about 40 percent has also been a significant platform for such investors, as it effectively intermediates funds across borders, thereby fostering international financial and economic inter-linkages. As the internationalisation of Islamic finance widens the spheres within which Islamic finance operates in, there are growing opportunities and challenges in the business environment that sets the current backdrop for Islamic finance. Continuous capacity and capability measures will be pursued to provide an enabling environment for industry players to remain competitive and innovative.