differences between market analysts. there were those whose views were relatively close to ours and there were those whose views differed substantially from ours. i do not consider it strange that such differences of opinion should arise. they reflect in part differences in the view of economic developments and how inflationary pressures may develop. for instance, in february we considered that the new information received since our previous monetary policy meetings in october and december did not justify the relatively large upward adjustments in the interest rate forecasts made by some other market analysts. the fact that other agents make their own assessments of how the interest rate will develop is essentially very positive. one of the arguments put forward against a central bank presenting its own forecast for the interest rate path was that the agents in the financial market would then stop making their own analyses of interest rate developments. however, these misgivings have proved unjustified. opinions on the interest rate and future economic developments still differ, which is a natural consequence of the uncertainty regarding the future development of the economy. in particular those who operate in the financial markets know that we live in an uncertain world and for this reason the assessments of interest rate developments will continue to differ. another argument against a central bank presenting its own forecast for the interest rate is that the central bank would lose credibility if the forecast proved to be wrong. it has also been speculated in various market comments that it would entail a loss of prestige for the central bank to revise its forecasts and that the central bank should therefore by wary of doing so. but it is no stranger that we should revise our view of the future development of the repo rate than that we should revise our view of growth, employment or inflation when new information is received that changes the outlook. nor is it stranger for the central bank to revise its forecasts than for other analysts to do so. what is important is that we can motivate why we are revising our views and that we can do so in an understandable manner. this is linked to the fact that it is difficult to make forecasts, not merely for interest rates, but also for other macro economic variables. the fact that it is difficult to make forecasts for the interest rate is illustrated clearly in the development of, for instance, forward rates over time. the figure ( figure 1 ) shows implied forward rate curves calculated on the basis of bank papers from the middle of each quarter. expectations of the development of the repo rate have varied substantially over time when

the same time, the regulatory system must be designed to prevent overly large differences between what is profitable for society and what is profitable for the private sector. this creates good conditions to make realistic assessments of the future and to take the right decisions regarding investment, consumption and financial investments. a very topical issue is how the accounting and auditing rules should be designed to create the best possible conditions for lenders and investors to form an opinion of a company ’ s future profits and ability to pay. it is never possible to completely prevent unlawful actions, but is there something that can be done to avoid such scandals as have arisen with the fall of enron and worldcom? transparency must in any case be our guiding star! the present situation finally, i should like to comment on the present situation. quite contrary to what many feared, the downturn in economic activity following the unusually strong and prolonged upturn that was driven by the us economy appears to be moderate and short - lived. growth appears to be on the way up already this year. the heavy fall on the stock markets, terrorist acts, the crisis in argentina and the enron affair do not seem to have had excessively negative effects on the global economy. there is still some uncertainty, particularly with regard to the capacity of the us economy to once again take on its role as engine for growth. this uncertainty is partly connected with whether we have really seen the entire downside of the financial bubble, and partly with the consequences of the terrorist attacks. uncertainty has increased somewhat in recent weeks, but we can still assert that the turbulence in the financial markets does not appear to have had particularly major effects on the real economy. what could be the explanation for this? an important difference compared with earlier financial crises that have been preceded by high asset prices, strong growth and a large credit boom is that economic policy has now provided better fundamental conditions for stability than before. serious financial crises have often, as i mentioned earlier, been reinforced by the fact that various types of economic policy change have contributed directly or indirectly to forcing indebted households and companies to reassess their future ability to pay. the game rules have often been changed in a way that has meant that there were strong reasons for a downward revision of expectations for the future. the expectations on which companies and households have based their loan - financed consumption and investment decisions have afterwards proved to be overly optimistic. banks which have not been able to predict these changes and which have also had under - developed risk management