’ s forecast in mpu september 2010. sources : statistics sweden and the riksbank. figure 7 indicators for the business sector deviation from the average, percentage points note. companies ’ inflation expectations 12 months ahead are denoted in tenths of a percentage point. source : national institute of economic research. figure 8 shortage of labour in the business sector and capacity utilisation in the manufacturing industry deviation from average 1996 – 2007 source : national institute of economic research. figure 9 shortage of labour in the business sector and unemployment deviations from the average 2000 – 2007 sources : national institute of economic research and statistics sweden. figure 10 the gdp gap and the ru indicator percentage deviation from hp trend and number of standard deviations from the average note. broken line denotes the riksbank ’ s forecast mpu september 2010. source : the riksbank. figure 11 industrial production, capacity utilisation and potential industrial production per cent * calculated as industrial production x ( average capacity utilisation 1996 – 2007 / capacity utilisation ). sources : national institute of economic research and statistics sweden. figure 12 the ru indicator and hicp inflation excluding energy per cent, deviation from average 1997 – 2007 sources : statistics sweden and the riksbank. figure 13 cpi and cpif inflation annual percentage change note. the cpif is the cpi with a fixed mortgage rate. the broken lines denote the riksbank ’ s forecasts in mpu september 2010. sources : statistics sweden and the riksbank. figure 14 repo rate per cent, daily data and quarterly averages note. broken line denotes the riksbank ’ s forecast in mpu september 2010. source : the riksbank.

measured in a number of ways and we regularly utilise a large number of measures for a more detailed discussion see adolfson, m. and soderstrom, u. ( 2003 ) “ how is the economy affected by the inflation target? ” sveriges riksbank economic review 1 / 2003. the hicp is the eu - harmonised consumer price index and largely corresponds to the cpif, but is not affected by weighting changes at the end of each year. of underlying inflation. in this multi - faceted world, we make the best assessments we can of the direction of monetary policy. at the latest monetary policy meeting on 1 september, we decided to raise the repo rate by 0. 25 percentage points to 0. 75 per cent, and our assessment was that the repo rate will gradually be increased to more normal levels as resource utilisation increases. the repo rate will nevertheless be abnormally low for some time to come in order to support the recovery in the economy. i supported the forecast for the repo rate made in the latest monetary policy update – a forecast that i believe is well in line with the picture of a stable economic upturn in sweden. ( figure 14. repo rate ). for my part, i have felt very convinced of two things, which i clearly explained in the most recent minutes. firstly, we ought to increase the repo rate in the months ahead, as the swedish economy is developing so strongly. resource utilisation is increasing, which will increase inflationary pressures over time. we should therefore ease up in order to avoid excessive inflation in the period ahead. secondly, the long - term repo rate should be approximately 4 per cent, corresponding to inflation of 2 per cent and a real interest rate of 2 per cent. the latter figure is what the short real interest rate on government bonds has been, on average, in both the united states and the eurozone for long periods of time. on the other hand, it is difficult to have a definite opinion of what the repo rate ought to be in two or three years. neither our own nor the market ’ s forecasting abilities are sufficient to make solid forecasts over such a period. among other reasons, the repo rate will be dependent upon developments in the eurozone and in the united states, and the impact these may have on the swedish economy. weaker international development could entail weaker development in sweden and a lower repo rate path in the