that the bias estimate for gdp changes character depending on whether the sample refers to 2000 - 2006 or 2002 - 2006. this result from an earlier forecast evaluation applies only to forecasts for the next year. the result is statistically reliable. there are of course a number of difficulties in making correct comparisons of this nature, which is also indicated in the study. it is important to note that the riksbank made forecasts under the assumption of an unchanged repo rate up to the publication of the second inflation report of 2005. with this method cpi inflation should actually be over - estimated in the shortterm if the interest rate is cut. it is actually only with effect from this year, when we have begun to make forecasts based on our own interest rate path, that the forecasts fully mirror our views of the future. another point is that the forecasts are rarely made at the same point in time, which can of course make accuracy more difficult. however, the analysis here is designed to ensure this problem is as small as possible. forecasts are uncertain and we mark this by an uncertainty band forecasts are uncertain and one is not always right. most of those who make forecasts are very well aware of this. back in 1997 when we began publishing forecasts of inflation we reported uncertainty bands around the forecasts. as uncertainty increases over time, the uncertainty band takes the form of a fan ( figure 13 ). we now also publish uncertainty bands for the gdp and repo rate forecasts. the uncertainty that is reflected in the bands can be divided into three parts. it reflects the fact that we are uncertain about the current situation, regarding how the economy functions, and about what shocks might occur during the forecast period. the uncertainty bands are constructed so they are symmetrical around our main scenario and for gdp growth and the inflation rate the breadth of the bands is calculated with the aid of our earlier forecasting errors. this gives an incentive to make good forecasts, as large forecasting errors bear the penalty of broad uncertainty bands and the risk of reduced credibility in the forecasts. the uncertainty band for the repo rate cannot be calculated in the same way, as we have only begun to make our own forecasts for the repo rate this year. there are quite simply insufficient historical forecasts to use as a base. the uncertainty band for the repo rate has instead been constructed with the aid of forecasting errors among the so - called implied forward rates ( figure 14 ). the

on all forecasting horizons ( figure 4 ). 7 the time series model is on the whole slightly more accurate than our forecasts have been during this period. the forecasting memory for productivity has only extended one quarter ahead ( figure 7 ). the same applies to the correlation between forecasts and outcomes. it is 0. 7 one quarter ahead, while it is zero both one and two years ahead ( see figure 9 ). inflation forecasts when it comes to inflation measured as the annual rate of increase in the cpix, we have made fairly accurate forecasts during a large part of the period evaluated, that is, 2000 - 2006 ( figure 3 ). something we missed was the sharp upturn in inflation in spring 2001. this was primarily due to an outbreak of mad cow disease which led to rising food prices. but since then we have made inflation forecasts that have been close to the outcomes. for instance, the downswing in inflation in 2003 was captured to a greater extent than the upswing at the beginning of 2001. the inflation forecasts are on the whole more accurate than the time series models. the forecasting memory for the cpix extends eight quarters ahead ( figure 8 ). the correlation between forecasts and outcome is almost 0. 8 one year ahead and just over 0. 5 two years ahead ( see figure 9 ). none of the other variables has as high a correlation two we have earlier analysed this in the context of a structural model, ramses. the evaluation appendix to inflation monetary policy report 2007 : 1 contains an analysis of, for instance, the effects of productivity shocks on the economy. years ahead. the fact that the correlation wanes in time is natural as the uncertainty in the forecasts increases. is there any bias one or two years ahead in the forecasts? let us now look at whether there is any bias, that is, systematic over - estimation or underestimation in the forecasts one and two years ahead. the smaller the bias a forecast has, the better it is. one year ahead the bias for annual gdp growth is very small. however, two years ahead the forecasts have been almost been four tenths too high on average, compared with the outcomes, which is not negligible ( figure 10 ). with regard to the annual development in employment, the bias is just under three tenths one year ahead and two tenths two years ahead. employment has been under - estimated in both cases, that is