##ton concluded that : " the detailed study of liquidity and of the development of credit are essential elements in judging financial conditions, even though they cannot be, and never have been, the sole elements ". so, what has been going on recently in terms of uk credit conditions? going back to early 2020 as covid broke out, among companies there was an extraordinary, but understandable, increase in demand for liquidity and credit, often as a precaution in the face of hugely uncertain and worrying conditions. this need was – rightly in my view – 1 / 9 bis - central bankers'speeches met by a combination of the commercial banks, the government and the bank of england, with the banks, rightly, first in line, and the public authorities coming in only as the full and unprecedented magnitude of the economic shock became clearer. turning to the present day picture, large parts of the precautionary draw - down of credit during the early covid period are being repaid, consistent with the unwinding of the covid shock. but to judge the current effectiveness of the banking system, we need to look at whether gross new lending is getting to those who need it. for both small and large firms, gross lending is back to around the 2019 average in nominal terms. our regional agents tell us that this picture is broadly consistent with what they hear, but they caution us that there remain businesses that find it difficult to access working capital. of course, all lenders have to take the risk of borrowers into account. in the household sector, consumer credit appears to be robust, while secured lending remains weaker but with some early signs of strengthening based on more forwardlooking measures such as mortgage applications and approvals. in our latest quarterly credit conditions survey, lenders expect demand for both secured and unsecured credit to increase over the next three months. our assessment of lenders is that they are well placed to meet such a pick - up in lending. this period of time has been the first big test of the post global financial crisis ( gfc ) banking reforms, and the system in this country has come through effectively. but, there is a puzzle expressed often by banks. if it is a good news story, why are the valuations of banks so much in the doldrums? on the subject of bank valuations, let's start with some facts, and particularly comparisons to the pre - gfc period. i am going to

it could lead to considerable, and undesirable, fluctuations in interest rates, production and employment. during the years that monetary policy has employed an inflation targeting strategy, we have developed a clear analytical framework for our work. the riksbank has developed a simple rule to make monetary policy more easily comprehensible and to create stability when making monetary policy decisions. what this entails is that if the inflation rate 1 - 2 years ahead is expected to be below the 2 per cent target, the repo rate will usually be lowered, and vice versa. however, it is important to point out that this rule cannot be applied mechanically and nor has this been the case earlier. it is also important to emphasise that openness regarding our forecasts is a vital part of the monetary policy reasoning, as it enables discussion and assessment of our decisions. i will return to this issue later. monetary policy therefore focuses on expected future inflation and not the most recent cpi outcome. however, new results can of course affect the assessment of future events. the current economic situation is very important in that it comprises the foundation for our forecasting work and therefore affects the conclusions we will reach regarding future inflation. nevertheless, we cannot use monetary policy measures to influence economic conditions in the very short term, unless we are prepared to make drastic changes in the interest rate. the riksbank ’ s views on inflation prospects are described in detail four times a year in our inflation reports. in connection with the publication of two of these reports there is also a public hearing of the riksbank governor in parliament by the riksdag committee on finance. the initiative to these meetings came from the riksbank, as a way of creating further clarity and transparency with regard to monetary policy. a press release is published after each interest rate decision, containing a brief description of the background to the decision. a more detailed account of our discussion and the motivation for the decision can be obtained from the minutes of the monetary policy meetings, which are usually published approximately two weeks after the meetings. growth expectations appear to be correct our monetary policy decisions are thus based on the forecast of inflation 1 - 2 years ahead. the assessment of inflation prospects begins with an analysis of developments in the real economy. this has not been an easy task in recent years and the riksbank, in common with many other analysts, has been forced to reconsider its forecasts of economic growth on a number of occasions. sweden, like most other countries