again. this is also what is forecast in the main scenario of the report. however, to some extent, it also concerns the effects on inflation which risk becoming more permanent and which may need to be counteracted with monetary policy. when inflation rises and is above the target, as cpi inflation now is, it is important that it is not allowed to become entrenched and become permanently high. the risk of this increases if inflation expectations rise, and that is exactly what has occurred. inflation expectations have risen not just one year ahead, but even two and five years ahead, which is troublesome. the monetary policy decision the upturn in inflation and in inflation expectations in the slightly longer term were also factors that indicated the interest rate should be raised at the monetary policy meeting in february. the forecast in the main scenario of the monetary policy report means that growth will slacken but will still remain good during the forecast period. i personally was slightly more concerned about the problems in the financial markets and the risk of weaker developments abroad, which would of course also affect developments in sweden. as the minutes of the meeting show i was, on the other hand, not quite as concerned about cost pressures as before. wages did not appear to be rising as quickly as the riksbank assumed shortly after the new agreements were met last year. the wage forecasts were also adjusted downwards in the monetary policy report. in addition, my opinion was that the slowdown in productivity growth last year was more comprehensible when the publication of national account statistics for the third quarter showed that output growth had clearly slowed down as early on as at the beginning of 2007. growth in the number of hours worked did not slacken as output growth. this is the normal pattern when growth slackens in that the labour market typically lags behind somewhat in the economic cycle. i therefore assessed that weaker productivity growth indicates that companies will be more restrictive in recruiting labour rather than that we will see rapid price increases in the future. when i weighed together the great uncertainty about developments in the financial markets and the risk for a weaker development abroad with the swedish economic outlook and the risk of inflation in sweden remaining high, my conclusion was that the interest rate should be left unchanged. i would like to emphasise that it should not be regarded as though i wished to attach less weight to the inflation target. it was and is more a question of how much time it will take to bring inflation back on target. i also pointed out that the ri

food prices also means that households ’ purchasing power is being undermined. these negative effects have been counteracted to some extent by the federal reserve ’ s cutting the policy rate and by various fiscal policy measures. the forecast in the main scenario of the monetary policy report entails fairly weak growth in the us economy over the coming quarters. nevertheless, i considered there to be an evident risk that the problems would be more prolonged than was forecast in the main scenario of the report. growth in the euro area was also more subdued in the fourth quarter last year. the outcome had not been published at the time of the monetary policy meeting, but it was largely as expected. households in the euro area appear to have been very restrictive with their consumption expenditure. retail trade turnover fell at the end of last year and it is also possible to discern from survey data that household confidence has declined. as in the united states, more prolonged problems in the financial markets can lead to developments being weaker than in the main scenario. my view in february of developments in sweden inflation has gradually risen in sweden in recent years. on average, measured in terms of the cpi, inflation was 2. 2 per cent last year, which is close to the inflation target. the upswing in inflation was partly due to resource utilisation in the economy having increased and cost pressures having risen. hourly wages increased more rapidly than before at the same time as productivity growth slackened considerably. inflation has been very low for several years, but in 2007 rising cost pressures were a factor that contributed to inflation reaching the target. underlying inflation, measured in terms of the cpix, was however 1. 2 per cent as an average for 2007. during the autumn of last year inflation rose very quickly and, measured in terms of the cpi, reached 3. 5 per cent in december. underlying inflation, measured in terms of the cpix, rose to 2 per cent in december. the rapid upturn in inflation last autumn was largely due to rising energy and food prices, a reflection of the fact that prices rose rapidly on the world market. at the monetary policy meeting i pointed out that it is not possible to immediately counteract such rapid price impulses from abroad with monetary policy. quite simply, it must be allowed to take some time. in the monetary policy report the rapid price increases are to some extent assessed to be of a temporary nature. if world market prices do not continue to rise at the same rapid pace in future, inflation will fall back