aimed to voice a single opinion. with the new board, each of the six members is individually accountable for the monetary policy decisions. so ought not each one be allowed to make their voice heard? how could their individual contributions be properly assessed without knowing their positions on monetary policy issues? but how were all the speeches and other statements to be coordinated efficiently in practice to ensure that they conveyed a single, clear picture? with the procedure we have chosen, you know that each of us normally speaks independently of the others. the minutes of the monetary policy meetings are published after a time and record our discussions in outline, besides containing information about how each of us voted. we have deliberately refrained from labelling what we say at the meetings with our names. we believe that would not work very well ; the discussion would presumably be more premeditated than one would wish. but even with the system we have chosen, there is presumably a risk of jeopardising the spontaneous exchange and testing of ideas. our joint communication about monetary policy issues takes the form of the inflation report and the press notices and communiques that are issued after the meetings. we also have an arrangement whereby one of us is entitled to speak for a majority of the executive board. an announcement to that effect is made and to date it has happened only when the governor meets the riksdag ’ s standing committee on finance. at the press conferences on monetary policy, moreover, the governor and myself, as the member responsible for the preparation of material, speak on behalf of the board. our procedure clearly entails risks. the media may focus most of the time on differences between our views, which could harm the riksbank ’ s image and possibly also create internal problems. while that has generally not been the case, our system is vulnerable. it would not be difficult for a board member to act in such a way that ‘ conflicts at the riksbank ’ hit the headlines. we have tried to avoid this, for instance by not arguing with each other in public. we have also refrained from evaluating colleagues ’ arguments and proposals. before choosing an approach to communication and transparency, we again tried to learn from other central banks. the main issue in the public debate seems to have been the minutes of our meetings. i believe the publication of minutes has advantages. the minutes provide a clear opening for the evaluation of what individual board members contribute to the monetary policy discussion, besides facilitating the democratic control of and insight into our work.

the private sector remains the main driver of monetary dynamics. on an annual basis, loans to the private sector as a whole have continued to increase at double - digit rates over recent months, with borrowing both by households and by nonfinancial corporations rising rapidly. ongoing strong lending to households continues to be explained, in particular, by borrowing for house purchases. the dynamic growth of money and credit, in an environment of already ample liquidity, points to increased upside risks to price stability at medium to longer horizons. monetary developments therefore require careful monitoring, particularly in the light of strong dynamics in housing markets. to sum up, annual inflation rates are expected to remain elevated, at above 2 % on average, in 2006 and 2007, with risks to this outlook on the upside. given strong monetary and credit growth in a context of ample liquidity, a cross - check of the outcome of the economic analysis with that of the monetary analysis confirms that upside risks to price stability prevail over the medium term. a further adjustment of interest rates was therefore warranted. by acting today in a timely fashion, the governing council is helping to anchor medium and long - term inflation expectations at levels consistent with price stability, thereby making an ongoing contribution to sustainable economic growth and job creation. looking ahead, given that our monetary policy continues to be accommodative, a progressive withdrawal of monetary accommodation will be warranted if our assumptions and baseline scenario are confirmed. the governing council will continue to monitor very closely all developments so as to ensure that risks to price stability do not materialise. concerning fiscal policies, given the outlook for economic growth, it is of crucial importance that euro area governments avoid pro - cyclical policies and step up the pace of fiscal consolidation. as budgetary targets for the current year are not particularly ambitious, a rigorous implementation of plans on the expenditure side is especially warranted, and any additional windfall revenues are best used for deficit reduction. beyond the implementation of such prudent policies in the remainder of this year, the medium - term focus of fiscal policies should be on correcting the underlying sources of imbalances in public finances. euro area governments, many of which are now finalising their budget plans for 2007, should take full advantage of the economic environment to bring forward the structural adjustment necessary for the durable correction of excessive deficits, so as to reach their mediumterm budgetary objectives at an early stage and thereby prepare public finances for the acute demographic challenges they must cope with.