line with questions discussed here in the committee on finance. this emphasises the importance of using debate and dialogue to reach new solutions. we essentially all want the same thing – to create in the best way possible the right conditions for good and sustainable economic growth. other changes the committee on finance itself has also initiated several changes that contribute to good discussions on monetary policy ( slide 4 ). one change i am thinking of is the fact that the hearing with the governor of the riksbank now takes place a couple of weeks after the monetary policy report has been published and that experts can be called in to assist the committee, if necessary. of course, it means i have to answer more difficult questions the more time you have had to prepare yourselves. but this is how it should be and something positive for all parties. i would also like to mention another new element – a change of name which was largely initiated by the committee on finance. i am referring to the measure of underlying inflation calculated as cpi adjusted for households ’ mortgage interest expenditure. it also excludes the direct effects of changes in indirect taxes and subsidies. this measure was previously called und1x. this name referred to the fact that it was a measure of underlying inflation, but probably appeared a little too cryptic. i remember that i may have let slip that i thought it sounded like the name of a rocket fuel during my first hearing. the new and hopefully slightly less difficult name since a week ago is cpix, where the x indicates that something has been excluded from the cpi. this takes me onto today ’ s second theme, namely inflation prospects, our most recent interest rate decision and our view of what monetary policy will be appropriate in the future. the economic situation and future prospects it can hardly have escaped the attention of anyone here today that we now base our forecasts on our own assessment of what future movements in the repo rate we believe will provide a well - balanced monetary policy. so before i take up the rest of the economic analysis, i shall first describe the interest rate assumption. our analysis is based partly on the increase in the repo rate of 0. 25 percentage points to 4 per cent which we decided on just over two weeks ago, and partly on the fact that the interest rate will need to be raised slightly further in the future – to around 4. 25 per cent during the first half of 2008. so how did we reach this assessment? a strong swedish economy with increased cost and inflationary pressures … if we begin

widespread trading relationships. as a member of the european union, moreover, we have to observe many of the established rules and guidelines ; we also participate in the european discussion on the formation of economic policy. against this background, my talk today concerns economic policy in europe and the new conditions that accompany the euro. the single monetary policy basic features the european central bank ( ecb ) has been responsible since the beginning of this year for the single monetary policy in the euro area, with the primary objective of maintaining price stability. the general formulation of this objective has been defined more precisely by the ecb as being a year - onyear increase in the harmonised index of consumer prices ( hicp ) for the euro area of below 2 per cent. in that this definition refers to the rate of increase, it means that deflation is excluded in practice and the annual rate of change in the hicp should accordingly be between 0 and 2 per cent. the single monetary policy is based on assessments of a wide range of economic and financial indicators of inflationary pressure. a prominent position is likely to be accorded to the money supply. as a reference value for annual monetary growth, the ecb has initially set a rate of 4½ per cent. the combined strategy — focusing on inflation but with a reference value for monetary growth — is motivated by the great uncertainty as to how the aggregate euro economy will function initially. the ecb therefore wants to avoid having to stand on only one leg in its assessments. the ecb also states that the objective is to be fulfilled over the medium term and thereby underscores that the single monetary policy is not to parry every short - term shock. deviations from the target may be acceptable during a relatively short period. an analysis of the economic situation is published by the ecb in a monthly bulletin, which aims to ‘ explain to the public the monetary policy decisions taken by the governing council of the ecb ’. the bulletin will also consider fiscal policies, economic structures and labour market tendencies in the euro area. but the ecb does not publish either forward - looking assessments and forecasts of inflation or the minutes of decision - making meetings and the positions of individual members. press conferences with the ecb executive will be held, however, in connection with meetings of the governing council. in addition, policy will be explained continuously by executive board members in speeches and appearances before the european parliament. inflation assessment the ecb and the riksbank both have price stability as the monetary policy