beginning of 2011. the economic policy measures that have already been taken and are expected to be taken in the future will contribute to a recovery abroad and in sweden as the global financial system begins to function better. at the same time, a weak krona stimulates the economy. gdp growth is expected to be positive but relatively low in 2010. however, the labour market will lag behind and employment will not begin to rise until 2011. inflation measured in terms of the consumer price index will fall very rapidly in 2009. this is primarily because the riksbank ’ s substantial interest rate cuts at the end of 2008 and the beginning of 2009 reduced households ’ housing costs. if the effects of unchanged mortgage rates are excluded, inflation will develop in a more stable manner and be close to the target of 2 per cent for most of the forecast period. it is weak productivity developments and the weak krona that will contribute to holding up inflation despite the economic recession. if the swedish economy risks deteriorating more than expected, it may be necessary to implement further unconventional measures the future direction for monetary policy will depend, as usual, on how new information on economic developments abroad and in sweden will affect the prospects for economic activity and inflation in sweden. if the economic situation deteriorates further it is possible to use monetary policy easing to further stimulate the economy. but there are also reasons for further consideration of what is an appropriate level for the repo rate. if the repo rate were to become too low the transmission mechanism might become less effective. this is because some market rates are lower than the repo rate. when the repo rate approaches zero, these interest rates would no longer be able to follow. a too low repo rate could also create costs in the financial sector as the result of, for instance, a reduction in the banks ’ margins. there is thus a risk that the functioning of the financial markets will deteriorate if the repo rate is cut further. in this case monetary policy will not have the intended effect. however, the riksbank can stimulate the economy further in other ways without needing to cut the repo rate to zero. the most important measure concerns ensuring that the real interest rate, that is, the repo rate adjusted for inflation expectations, is sufficiently low. this can be done by influencing inflation expectations, which is made easier as we have a numerical inflation target and we publish forecasts for both the inflation rate and the repo rate. we can, for instance, announce

levels : • individual countries are sometimes for political reasons not willing to take the sometimes bitter medicine prescribed by the imf ’ s staff and executive board and engage in serious dialogue. neither is it unusual, if they do swallow the medicine, that the countries blame any side - effects on the imf whether they were a result of the medicine or not ; that the ownership – to use imf vocabulary – is weak. at the same time, there may also be scope for the imf itself to become better at operating in an environment where strong political considerations are present. • nor are groups of countries always willing at imf meetings to raise questions of crucial importance to the world economy as a whole. larger countries do not want to run the risk of coming under the spotlight. as a result, the big industrial countries normally prefer to discuss imbalances and exchange rates in a narrower circle, if at all. • also when dealing with financial crises, political considerations are constantly present. everyone that follows imf ’ s work in this area the last 10 - 15 years, has been able to see that geopolitical considerations sometimes play an important role when defining the conditionality – with mixed results. what can be done to strengthen the imf? there is every reason to approach this question with humility. many people have reflected on it and plenty of suggestions have been put forward in the debate. since the crucial problems are political, they are also likely to require political solutions. in recent years, the discussion has focused on matters to do with quota, voice and representation ( qvr ). many countries consider themselves to be underrepresented under the current structure. almost without exception, countries favour criteria for representation that boost their own influence. this is normal when these kind of issues are discussed, but makes progress difficult. in the eyes of many it is europe that is overrepresented. but it is enough to read the book ‘ an uncertain world ', by the former us secretary of the treasury robert rubin, to realise that it is not europe that has the real power - it is the united states that essentially calls the shots. this simple example illustrates that there is a big difference between the formal and actual power. personally, i come to a number of different conclusions from this discussion. the world has changed since the fall of communism and as a consequence of the positive development in a large number of emerging markets. that gives cause to modify countries ’ formal influence in the imf by updating quota