instance, the risk of contagion effects and the fact that inflation can become entrenched, as i mentioned earlier. both in sweden and abroad there are many examples of inflation remaining high when growth slows down or falls. compared with the assessment we made in july, we made a downward adjustment in our forecast for the future repo rate. new statistics indicated that both global and swedish economic activity had weakened sooner than expected and we therefore revised down our forecasts for growth. given this, i considered that we have now completed our interest rate increases. i expected that the next stage will be a cut and that monetary policy will ease slightly during 2009. i think it is difficult to claim that the interest rate path we presented in september is too strict. the interest rates are not particularly high, either from an historical perspective or in comparison with many other countries with a floating exchange rate. resource utilisation, the good public sector finances and the surplus on the current account provide us with a good starting point. the swedish economy has the necessary requirements to meet both a limited downturn in economic activity and growth around the long - term average towards the end of our forecast horizon, at the same time as attaining the inflation target. in addition, the current interest rate provides some support for the exchange rate. this has some value with regard to meeting the inflation target. a few final words let me just very briefly summarise what i have talked about today. the riksbank strives constantly both to attain the inflation target and to manage its task of safeguarding financial stability in the best possible way. if we succeed, we provide stability in the swedish economy, particularly in times when there is international turmoil. we will probably have to live with the financial market turbulence and the crisis in the united states for a good while to come. it is too early yet to be able to foresee when this will all be over. however, what we can say is that it will take time. the next occasion when we will be weighing together all of the new information received and assessing how these developments affect the prospects for growth and inflation is at our next monetary policy meeting at the end of october. until then we will of course continue to follow developments very closely and to have regular contacts with banks, market participants and other government agencies. we are constantly trying to include all important information in our analyses. this is the way we always work, and it applies to both financial stability and monetary policy. let me conclude with

ranges and have not risen sustainably. 4 meanwhile, market based measures of inflation compensation have declined noticeably over the past two years at longer - term horizons, and have shown little improvement despite the recent stabilization in the price of oil and the exchange rate. thus, we cannot rule out that the sustained period of undershooting the inflation target along with global disinflationary pressures are weighing on inflation expectations. recognition of these developments is reflected in the evolution of the forecasts of federal open market committee ( fomc ) participants in the summary of economic projections ( sep ) from june 2012 to june 2016. the sep forecasts have shown repeated mark downs of the central tendency of the projection for core pce ( personal consumption expenditures ) inflation, and the attainment of 2 percent at the upper end of the range has been pushed out repeatedly from 2012 initially to 2017 most recently. the apparent flatness of the phillips curve together with evidence that inflation expectations may 1 / 8 bis central banker's speeches have softened on the downside and the persistent undershooting of inflation relative to our target should be important considerations in our policy deliberations. in particular, to the extent that the effect on inflation of further gradual tightening in labor market conditions is likely to be moderate and gradual, the case to tighten policy preemptively is less compelling. 2. labor market slack has been greater than anticipated second, and related, although we have seen important progress on employment, this improvement has been accompanied by evidence of greater slack than previously anticipated. this uncertainty about the true state of the economy suggests we should be open to the possibility of material further progress in the labor market. indeed, with payroll employment growth averaging 180, 000 per month this year, many observers would have expected the unemployment rate to drop noticeably rather than moving sideways, as it has done. it is true that today ’ s unemployment rate of 4. 9 percent is only 0. 1 percentage point from the median sep participant ’ s estimate of the longer - run level of unemployment. however, the natural rate of unemployment is uncertain and can vary over time. indeed, in the sep, the central tendency of the projection for the longer - run natural rate of unemployment has come down significantly, from a range of 5. 2 to 6. 0 percent in june 2012 to 4. 7 to 5. 0 percent in june 2016 — a reduction of 1 / 2 to 1 percentage point. 5 we cannot rule out that estimates of the natural unemployment rate may