before when we used the more easily understood, but less realistic, assumption of an unchanged repo rate. instead we are painting a more complex picture, the way it actually looks to us who make the decisions. slightly more complicated on the one hand, but on the other hand more realistic and with significantly better opportunities to evaluate our work! the fact that we are publishing our own forecast for the policy rate also means that it will be very clear when we reconsider our view of what interest rate policy will be needed in the future. it also becomes evident when our assessment differs from that of the market, and these differences often cause a debate. but the fact that we are criticised for changing our minds, or for our views being different from the market view, is hardly a reason to refrain from reporting as honestly as possible what we believe. the fact that we changed our view or made a different assessment than the market also happened before, when our forecasts were based on the assumption of an unchanged repo rate. the difference was merely that it did not show as much as there was no interest rate forecast to use as comparison. but it is important to distinguish between what is criticism of the riksbank ’ s economic assessments and what is criticism of the actual communication strategy. at the time as we published the first interest rate paths and stopped " signalling by degrees ”, our view of economic developments differed from many market agents ’ analyses. i believe that this contributed to criticism that actually dealt with differences in economic assessments partly spreading to the changes in our communication. it is too early to assess as yet, but i am convinced that the advantages of our new method of communicating will in the long term outweigh any disadvantages. i would like to emphasise that an open and constructive debate is something we welcome. we will not refrain from changes that we believe lead to a better monetary policy, just because we risk being criticised in the process. this would be a very bad strategy and does not fit in with our task. we believe that the best way to conduct monetary policy is to explain as openly and honestly as possible both what we are doing and how we are thinking. and this is definitely something the general public can require of us in our role as independent authority. all of these changes are steps in that direction. steps we have taken to become clearer and more open – to become more efficient in our way of communicating. i would also like to point out that much of what we have done is in

with the situation at home, it is clear that the swedish economy is continuing to show strong growth ( slide 5 ). we see increased cost and inflationary pressures ahead of us and there are a couple of main factors in this development that i wish to highlight. strong growth both the statistics in the national accounts and the survey of swedish companies carried out by the riksbank confirm the picture of strong growth in sweden. although the rate of increase in gdp has slowed down slightly, it remains fairly high and is expected to be around 3 per cent this year. our assessment is that we are in a situation where we are currently making more use of economic resources than normal. if we look ahead, we are expecting gdp to grow slightly more slowly up to 2010 than it has in recent years. this is due to several interacting factors ; we believe that productivity and the labour supply will increase more slowly, and that international growth will be lower. in addition, we are expecting the interest rate to rise gradually, the exchange rate to be stronger and investment to increase at a slower rate. these factors subdue growth. … and tighter labour market despite the fact that gdp growth has been strong for several years, it was not until 2005 that employment began to increase ( slide 6 ). and in 2006 both the number of hours worked and the number of persons employed rose quite substantially. this was partly because the number of people in employment measures increased considerably during the fourth quarter of last year. but despite the fact that fewer people are in labour market programmes this year, the number of employed has continued to increase. this indicates considerable strength in the labour market. we also assess that employment will continue to increase during the forecast period, but at a slower rate. the fact that the pace slows down is due to the economic upturn slackening. it is also due to higher wage increases contributing to a lower demand for labour. the supply of labour has also increased, but not as much as employment. open unemployment has thus fallen ( slide 7 ). according to our forecast, the labour supply will continue to increase, albeit at a slower rate, during the forecast period. this development is mainly due to the economic cycle, but also to some of the government ’ s measures. the fact that the rate of increase is slowing down is due to the economic upturn slackening, and also to factors such as the number of persons in the age groups with high participation in the labour force declining. all in all, this will lead