able to arouse your interest in financial stability issues. as you of course know, developments in the financial system in recent years have been very rapid and made substantial, new demands on all involved. this includes the riksbank. following our own crisis experiences, the riksbank became engaged in these issues earlier than many other central banks. however, over time financial stability issues have moved further up the agenda in central bank circles. we are now engaged in a number of projects together with colleagues from other central banks, finance ministries and financial supervisory authorities in other countries. parallel with this work we are trying to gain a more in - depth understanding of our own and to develop our communication. little by little we are taking up new issues that are important for financial stability. we have received further ideas from the assessment group we engaged last year. we clearly do not lack challenges. but this is what makes the work at the riksbank so exciting. thank you!

external professors, giavazzi and mishkin. they considered that the riksbank ’ s forecasts for inflation compare favourably with those of other forecasters. however, for both 2004 and 2005 both we and other analysts overestimated inflation. this leads me on to some other questions i intend to take up. why did we overestimate inflation in our forecasts for those years? to what extent is the fact that inflation has undershot the target due to incorrectly formulated monetary policy, and what effects could this have on unemployment? why has inflation undershot the target? between 1995 and 2006 cpi inflation was on average 1. 3 per cent. measured in terms of und1x, which is what we normally base our monetary policy on, inflation amounted to an average of 1. 7 per cent during the same period. 1 one reason why cpi inflation has been lower than und1x inflation is that the repo rate has been regularly cut during this period. regardless of what measure is used, the legal objective of price stability has been achieved. however, inflation has on average undershot the target the riksbank itself has set. during 2004 - 2005 inflation deviated substantially from the riksbank ’ s target. some debaters have, as i mentioned at the beginning, claimed that this has to a large degree contributed to the high unemployment in recent years. of course, it is true that incorrectly formulated monetary policy could lead to unnecessarily high unemployment. but to be able to assess monetary policy in this regard, it is important to first find out why inflation has undershot the target. it is also important to examine what consequences these factors may have had for unemployment, in addition to the effects related to the formulation of monetary policy. the analyses made of why inflation has been so low in recent years indicate that it is primarily unexpectedly high and lasting growth in productivity that is the explanation and not contractionary monetary policy. 2 one factor that supports this conclusion is that inflation has been low despite demand and growth in the economy being relatively high. but the higher labour productivity has meant that companies have been able to increase their production without needing to raise their prices so much. it would also appear that it has contributed to companies being able to increase production without needing to recruit new staff to a great extent. this may be an explanation to what is referred to in the debate as “ jobless growth ”. the high productivity growth has also contributed to the riksbank being able to