are using incoming data to reassess the desirable path for monetary policy from meeting to meeting. ladies and gentlemen, compared to a year ago, when monetary policy was being tightened with large interest rate hikes, central banks are now proceeding more cautiously. this is because there is less need to further tighten monetary policy given the economic situation. it is not because of a change in central banks'approach, which is still characterised by the three principles of pragmatism, consistency and determination. data - dependent but with a clear medium - term orientation 2 / 3 bis - central bankers'speeches however, proceeding in a data - dependent, meeting - by - meeting manner also entails certain challenges. let me mention two. the first challenge is not to fall into the temptation of reacting to every data surprise with a substantial change in policy. such behaviour would result in an erratic monetary policy. as monetary policy affects the economy only with a certain lag, frequent changes of direction would be counterproductive. thus, while being data - dependent, central banks must maintain a medium - term orientation. their models, which incorporate medium - term relationships between economic variables, can help them achieve this goal. rather than reacting directly to the data, central banks first let their models process the incoming data. by factoring in different assumptions, the models provide decision - makers with scenarios for monetary policy. but models only reflect reality to a limited extent. therefore, outside information – such as discussions with company managers and anecdotal evidence – support central banks in checking the plausibility of the model results. and, finally, central banks have to use judgement in deciding whether a new scenario has become more likely, and whether a change in monetary policy is warranted. a second challenge is how to communicate the currently high uncertainty about the monetary policy outlook while still providing some guidance to households and companies. of course, central banks have to acknowledge that there is uncertainty surrounding the monetary policy outlook. at the same time, they can give households, companies and market participants a compass by clearly communicating their reaction function. this includes information on how they deal with trade - offs. what are their priorities when there are upside risks to inflation, but downside risks to economic activity? the snb has clearly communicated that its focus remains firmly on ensuring price stability. we will not hesitate to tighten our monetary policy further if necessary in order to keep inflation below 2 % on a sustainable basis. although this may not give markets certainty about future monetary

fallen three quarters in a row. at the same time, inflation in june and july was at its lowest level in more than two years. the new statistics from the united states have probably increased uncertainty over the strength of the recovery in the us economy. preliminary figures show that gdp increased in the second quarter by 1. 5 per cent, calculated as an annual rate, compared with the first quarter of this year. this means that growth slowed down by half a percentage point compared with the first quarter. the slowdown was unexpected, although our forecast in july pointed to modest growth in the us economy in the coming period. indicators for the third quarter are rather mixed so far. for example, unemployment increased somewhat in july, but at the same time employment increased at a relatively strong rate. consumption was weak in the second quarter, and sales of motor vehicles fell in july. however, the situation on the housing market appears to be improving. for instance, some indicators point to a continued rise in housing prices. unexpectedly strong second quarter in sweden while developments abroad have been weak, the swedish economy has continued to be surprisingly strong during the summer. at the end of july, a first preliminary compilation of national accounts figures for the second quarter was released. this showed that gdp, when seasonally - adjusted, increased by 1. 4 per cent compared with the first quarter, corresponding to 5. 7 per cent when calculated as an annual rate. this was a much stronger figure than we and other forecasters were expecting. it was primarily a stronger growth in investments in stock, and to some extent exports, that came as a surprise. the labour force survey statistics show that the number of persons employed continued to rise in june, both in relation to the corresponding period last year and compared with may this year, seasonally adjusted. unemployment adjusted for seasonal effects was 7. 5 per cent. the inflation rate in june and july remained low, which was expected. in july, cpi inflation increased by 0. 7 per cent compared with july last year, and cpif inflation increased by 0. 8 per cent. this was completely in line with our forecasts and with market expectations. information on developments in the real economy during the third quarter is so far limited to the business and consumer tendency surveys for july and to the purchasing managers ’ index for july. the national institute of economic bis central bankers ’ speeches research ’ s economic tendency survey fell in july and is at a level indicating that growth in the economy is weaker than normal.