experiences problems, this may then have serious repercussions for the financial system and, ultimately, the real economy. however, traditional supervision has not sufficiently taken into account the risk of financial problems becoming contagious. monitoring those risks is also a rather different process to monitoring the risks in an individual institution. traditional regulation and supervision have also found it hard to handle the tendency to rollercoaster behaviour of the financial sectors. in good times, there is almost always a tendency to expand lending and to ignore the risks this entails. however, when the downturn comes, the same players tend to run for the exits at the same time, which serves only to according to the analysis, a monetary policy designed such that housing prices continued to rise in accordance with the trend in the period 2000 - 2004 would have entailed a repo rate around 8. 5 per cent, an inflation rate of – 4. 3 per cent and a level of gdp growth of – 0. 6 per cent in 2007, that is in the year before sweden was hit by the global financial crisis ( see claussen et al., 2011 ). monetary policy is also ineffectual if one wants to counteract contagion risks due to the size and complexity of the banks and their exposures to each other. bis central bankers ’ speeches make the downturn worse. a vicious circle arises when a credit crunch leads to lower production and lower employment, which in turn feed back into in the financial sector by making loan losses even higher. this type of feedback effect between the financial system and the macro economy is not the province of traditional financial supervision either. this is where the concept of macroprudential policy comes in. quite simply, financial supervision must be complemented by a much broader approach. this broader approach is usually referred to as macroprudential policy. at the european level, the efforts to develop a framework for macroprudential policy have resulted in the formation of the european systemic risk board ( esrb ). this body, in which the riksbank is represented, will be responsible for overall macroprudential policy for the financial system in the eu. the esrb ’ s tasks include identifying and ranking systemic risks. when such systemic risks are discovered and are deemed to be significant, the esrb should issue warnings and, when appropriate, recommend that corrective measures should be taken. when necessary, the esrb will make these warnings and recommendations public. a so - called comply

due to demand being lower than normal and to the considerable uncertainty over international developments. in july we assessed that inflationary pressures would gradually increase over the coming years, as sweden and other countries recover. this means that cpif inflation is expected to reach 2 per cent in 2015. cpi inflation is expected to be higher than the target of 2 per cent at the end of the forecast period, which is due to mortgage rates rising when the repo rate starts to increase as the economy improves. let me describe in more detail the factors expected to contribute to the upturn in inflation. when global economic activity improves, global export prices are expected to rise. initially, the krona is expected to strengthen somewhat in trade - weighted terms, which will dampen the impact on swedish import prices in the near term. however, from the beginning of next year, we assess that the krona will no longer contribute to holding down import prices and they will then rise faster. as economic activity in sweden strengthens, the rate of wage increase will also rise. at the same time, we have assessed that labour productivity is increasing, which means that unit labour costs will continue to grow by around 2 per cent a year in the coming years. the fact that import prices rise faster, at the same time as unit labour costs continue to increase at a normal rate, will lead to companies ’ total marginal costs gradually beginning to grow at a more normal pace. we also predicted in july that the demand situation would improve during the forecast period, partly thanks to higher demand from abroad and a continued expansionary monetary policy in sweden. we are expecting that it will become easier for companies to raise their prices when demand increases. companies ’ profit shares will also increase towards more normal levels then. all in all, these factors – increasing unit labour costs, rising import prices and higher price mark - ups – lead to the assumption that inflation will rise in the coming period. continued low repo rate stimulates the swedish economy we executive board members assessed that the repo rate needs to remain low to support economic activity and to ensure inflation rises towards the target. we therefore decided at the meeting in july to hold the repo rate unchanged at 1 per cent, and the repo - rate path shows a slow increase beginning during the second half of 2014. monetary policy is thus very expansionary. however, the decision to hold the repo rate unchanged also gives consideration to the risks linked to swedish households ’ high debts. personally, i consider the rep