that such an upswing in economic activity will actually take place. developments in the usa play a key role here and the recovery that is expected to begin next autumn presupposes that the housing market there has stabilised, that the repercussions of the financial crisis have faded and that employment has begun to increase again. as the international forecast is highly uncertain, this also applies to the recovery that is predicted to take place here in sweden next year. when it comes to inflation, it is of course impossible to deny that it is uncomfortably high today. however, i do not believe that the outcome figures contain evidence that shows that the price increases for oil and other commodities have spread to other areas. the repo rate increase in july was also intended to prevent such contagion effects. the risk of these effects has also declined recently, partly due to the fall in the price of oil and other commodities and partly because economic activity is declining. the development of productivity has been a disappointment and we do not have a really good explanation of why it has been so weak. weak productivity also helps to keep cost pressures high. however, i was more worried about this earlier when economic activity was higher and the pressure on the labour market was stronger. in the current economic situation it is probably difficult for the companies to pass cost increases on to the consumers. there is every reason to continue to keep a close eye on inflation expectations as they are still some way above the inflation target. my assessment is, nevertheless, that they will decline as economic activity weakens and the actual rate of inflation falls. to sum up it can be said that the executive board agreed on a great deal – that economic activity is weakening, that inflation is declining and that it will be possible to reduce the interest rate in the period ahead. our disagreements related primarily to our different assessments of the strength of the processes and of how much monetary policy would need to help to reduce inflation. my final assessment was that inflation in the period ahead will move towards the target, in roughly the same way as illustrated in the monetary policy update, without the need to increase the interest rate. i thus voted to leave the repo rate unchanged. nor did i support the repo rate path presented in the monetary policy update. the path had been lowered compared to the assessment made in july. but i felt that the force of the economic downswing may easily make it necessary to reduce the interest rate more than is indicated in the new path. new statistics and

barbro wickman - parak : some reflections on the current situation speech by ms barbro wickman - parak, deputy governor of the sveriges riksbank, at handelsbanken, stockholm, 19 september 2008. * * * hawks and doves – opinions may differ on this way of trying to characterise me and my colleagues on the executive board of the riksbank, but it cannot be denied that it has had a major impact. how often the terms are used in the media varies somewhat over time depending on how great the difference of opinion among the executive board members is assumed to be at the moment. prior to the most recent repo rate decision, the terms were used quite frequently and it was claimed that there was a fight between the hawks and doves on the board about the direction the interest rate should take. the minutes of the latest monetary policy meeting, which were published the day before yesterday, reveal that i am one of the doves – if i myself should now lapse into this ornithological terminology. this time, i would like to add – it is not my intention to characterise myself as a permanent dove, no more than i intend to become a permanent hawk. as a monetary policy decision - maker you cannot sit in a predetermined rut, even though this would make life easier for those who like to express themselves in cliches. the minutes also reveal that the board was divided right down the middle, as was indeed speculated on beforehand. it was the governor's casting vote that decided the issue and that led to the repo rate being increased rather than being left unchanged. before i explain what lay behind the decision and present my own view, i would like to say something more general about the even result of the vote. there are a number of observations and reflections that can be made and that i feel are worth highlighting. i intend to conclude by saying something about the new statistics that have been presented since our meeting. a great deal has happened recently, not least on the financial markets. an entirely divided executive board is unusual a first observation is that if we look to the past it is very unusual for the board to be split down the middle. during the almost ten years that the board has existed and the approximately 85 monetary policy meetings that have been held, this has in fact only happened four times, counting the latest meeting. the most usual result, not surprisingly, is that the board has been unanimous