per cent. at the most recent monetary policy meeting on 3 may we decided to keep the repo rate unchanged. at the same time, our assessment was that the repo rate will need to be raised gradually, which we had also assumed earlier. now we believe that it will need to be raised more than was anticipated in february. this is necessary so that inflation will develop in line with the target. the main reason why we need to revise our forecast upwards is the outcome of this year ’ s wage bargaining rounds. the central wage agreements have been slightly higher than we had earlier had reason to believe, given that unemployment is still quite high in sweden. some forecasters have believed in a higher interest rate path than we have predicted. however, this does not appear to be because their forecasts for wages or fiscal policy have differed substantially from those made by the riksbank. i would also like to point out that so far there are no dramatic differences in our picture of current economic developments today compared with february. we will return to this in the monetary policy report to be presented in june with a more detailed account of how we view the situation. own interest rate forecasts when we expressed our views in february regarding the future development of the interest rate, it was the first time we presented our own assessment of the future repo rate path. by this we mean that we try to calculate what we believe will be a well balanced monetary policy over the coming years. previously we presented forecasts for the economy on the basis of what the financial market participants believed about the repo rate. now that we are presenting our own interest rate path it will be clearer both what we believe about the interest rate and what we believe about the economy in general. we consider this to be a major step forward in the riksbank ’ s way of explaining how monetary policy functions. for most people i believe it is more important to have an idea of the development of the interest rate over time, rather than to know what an individual interest rate decision will entail. in this context i always try to be as clear as possible. the interest rate path is merely a forecast, not a promise. the economic conditions on which we base our forecasts are constantly changing. changes are constantly taking place in the economy, which means that we have to reconsider our opinions of future developments. the interest rate path represents nothing more nor less than the best assessment we were able to make at the time it was published.

profits and the future outlook have now turned around more and more clearly in the us corporate sector, the immediate future continues to appear gloomy for european firms, which have seen their competitiveness deteriorate during the slowdown. so in this respect labour market legislation can be a hindrance to high long - term growth. furthermore, it is likely that legislation sometimes contributes to amplifying cyclical fluctuations rather than smoothing them, since productivity and profits in the corporate sector can easily become procyclical. there are indications that this has been the case during the most recent economic slowdown, as productivity has fallen sharply in the euro area at the same time as it, if anything, has tended to rise in the us. this also suggests that the us economy will normally emerge from slowdowns quicker than the euro area. sweden among the first to have a sustainable pension system another area in which sweden has led the way is in pension reforms. the atp reform in 1960 included buffers for the government finances. on the other hand, the reform was partly based on the assumption of continued robust growth and an average life expectancy of around 70 years. as we know, the 1970s and 1980s can be viewed as wasted years in growth terms. average life expectancy continued to rise sharply over the period, however. when it then became increasingly obvious during the 1990s that the atp system was also going to be under - financed, a number of years of political debate passed before a majority of the swedish parliament could agree on a new pension system that would be sustainable in the long term. with the implementation of the premium - reserve pension reform of 1998, a system was created that indeed is not guaranteed to result in high pensions for pension savers, but that at least will enable the public finances to bear the costs as an increasing number of people retire. however, sweden is not the only country to be facing a difficult demographic challenge, quite the reverse. in the euro area, some countries will have a considerably larger frequency of retirement in the coming decades, which means that in 30 years there will be twice the number of pensioners per worker compared with today. nevertheless, until recently pension reforms in most euro area countries have been conspicuous by their absence. in addition, the majority of these countries have only used a system whereby current pensioners are paid directly by current workers, and no funds have been reserved. the fact that this is unsustainable in the long run has been obvious for a long period. yet