. at the monetary policy meeting in april, the executive board decided on a less expansionary monetary policy, and the repo rate was raised by 0. 25 percentage points. it was important to act in good time. as i see it now, the repo rate needs to be a couple of percentage points higher in a few years ’ time. one of the purposes of a less expansionary monetary policy is to slow down economic activity and in this way reduce inflationary pressures in the economy. this can at the same time mean lower activity in the labour market. here it is important to bear in mind that monetary policy can only affect the labour market in an imprecise way, while labour market policy has a significantly greater capacity to focus on the specific problems. references boianovsky, mauro ( 1998 ), “ wicksell on deflation in the early 1920s ”, history of political economy 30 ( 2 ), pp. 219 – 73. bomberger, william a. and gail e. makinen ( 1983 ), “ the hungarian hyperinflation and stabilization of 1945 - 1946 ”, journal of political economy 91, pp. 801 - 824. delong, j. bradford and lawrence summers ( 1988 ), “ how does macroeconomic policy affect output? ”, brookings papers on economic activity 19 ( 2 ), pp. 433 - 480. drechsler, itamar, alexi savov and philipp schnabl ( 2020 ), “ the financial origins of the rise and fall of american inflation ”, essay, new york university stern school of business. economic commission ( 1993 ), nya villkor for ekonomi och politik [ new conditions for the economy and policy ], economic commission ’ s proposal, sou 1993 : 16 ( in swedish ). englund, peter ( 1993 ), ofredsar, atlantis. 13 fregert, klas ( 2013 ), “ belling the cat : eli f. heckscher on the gold standard as a disciplinary device ”, history of political economy 45 ( 1 ), pp. 39 – 59. goldstein, joshua s. ( 2003 ), “ war and economic history ”, in joel mokyr ( ed. ), the oxford encyclopedia of economic history, oxford university press. hall, george j. and thomas j. s ( 2022 ), “ three world wars : fiscal - monetary consequences ”, working paper,

riksbank ’ s particular responsibility. the riksbank ’ s objective is to maintain inflation at around 2 per cent a year. we measure inflation as a change in consumer prices. last year inflation was over 1. 4 per cent. over the past twelve months the main contribution to the increase in the consumer price index, or cpi, came from increased interest costs. however, higher electricity prices, rents and food prices also contributed to the increase in price levels. price reductions on post and telecommunications had a dampening effect on inflation, as did falling prices for computers, dvds and tvs. cpi is affected by technological changes, making it cheaper to make phone calls and to use the internet. inflation is also affected by the changes that come under the designation of globalisation, and that lead to increased trade and competition and to, for instance, cheaper imports of tvs. during the first three months of the year, inflation has not been as low as expected in the forecast made in february. this is mainly because energy prices have been slightly higher than calculated. in february we believed that cpi would be 1. 5 per cent in march. instead it was 1. 9 per cent. higher costs lead to higher prices one explanation as to why inflation is expected to rise in future is that growth in productivity – how much is produced per hour worked – is slowing down. at the same time, wages are rising slightly faster than they have done in recent years. all in all, this means that companies'costs are rising more quickly. it is difficult to say when a higher rate of increase in costs will lead to a higher rate of increase in prices. many swedish companies are currently making large profits and can probably manage a period with higher costs without raising their prices. there are also other factors holding back inflation. for instance, prices of many imported good are continuing to fall. better understanding productivity inflation has been below target since the beginning of 2004, but we can now see that it has begun to increase again. the low inflation can largely be explained by the surprisingly strong productivity. over the past fifteen years sweden has had higher productivity growth than many other industrial nations, including the united states. productivity is important for the development of inflation in the slightly shorter term. if productivity rises quickly, wages can increase without the companies ’ costs rising. high productivity growth thus leads to low inflationary pressure, all other things being equal. we still know too little about what lies behind the strong productivity growth. there are many indications