that there is a neutral arena in which the parties can meet outside formal negotiations. the outcome for wage earners has also been better in terms of higher real wage increases. virtually no real wage increases took place during the 1970s and 1980s. the wage increases agreed upon in the wage bargaining rounds of 2007 were too high the two most recent wage bargaining rounds have taken place under widely - differing circumstances. the wage bargaining rounds in 2007 took place at the crest of an economic boom, when the economic prospects were also strong for the following years, while the wage bargaining rounds in 2010 took place during a financial crisis and a deep recession. the wage bargaining rounds for 2007 did not work well from an economic perspective. the agreed wages were too high. i myself was quite optimistic ahead of the negotiations. my assessment was that they could be carried out in good order and could result in wage increases in line with the riksbank ’ s inflation target. but the result of the wage bargaining rounds was surprisingly negative. the centrally - agreed wage increases for the agreement period 2007 to 2009 were almost 3 per cent per year, which is almost one percentage point higher than during the previous agreement period. inflation increased and the riksbank successively raised the repo rate from 3 per cent at the start of 2007 to 4. 75 per cent in september 2008. in addition, the financial crisis led the economic conditions to change radically during the agreement period. during the autumn of 2008, it became obvious that the financial crisis would also hit the swedish economy hard. the riksbank and other authorities made comprehensive efforts to prevent the swedish banks from being dragged into the crisis. and, to alleviate the consequences of the crisis, the riksbank rapidly lowered the repo rate to 0. 25 per cent in july 2009. even so, developments became clearly worse than expected. during 2009, gdp showed the greatest fall since the second world war, while unemployment rose to almost 9 per cent at the end of 2009. this reaffirmed the conclusion that wage increases had been too high. on average, wages increased by 3. 7 per cent during the years 2007 to 2009. the wages agreed for 2010 contributed towards preventing the crisis from being so deep in sweden in many ways, the wage bargaining rounds in 2010 were the direct opposite of the wage bargaining rounds in 2007. developments were marked by the financial crisis, which resulted in low wage agreements which were largely in line with the riksbank ’ s forecasts. the crisis also meant that the common

##ilisation – monetary policy can no longer be “ the only game in town ”, as for instance former ecb governor mario draghi has put it. 11 one normally expresses it as fiscal policy shall help to parry economic downturns. an interesting thought that i feel deserves greater consideration is whether fiscal policy could play a more explicit role also with regard to attaining the inflation target. 12 after all, the inflation target in most countries has the support of the political system. thus, it is not merely the central bank's target, but society's target. fiscal policy will also function better if the inflation target can continue to be the anchor in price - setting and wage formation. given this, it does not appear entirely unnatural for fiscal policy to support monetary policy in exceptional circumstances with regard to maintaining confidence in the inflation target – and thereby ensuring that the central bank's policy rate can continue to be an effective tool in the future. conditioning of monetary policy a possible route? an area that we as central bank have control over, and where we could possibly become more effective, is our communication of future monetary policy. although we have been publishing a forecast for the repo rate for many years now, 10 for a more detailed discussion of the riksbank ’ s monetary policy toolbox, see ingves ( 2020 ). 11 moreover, ideas have recently been put forward with regard to fiscal policy being a more effective stabilisation policy tool than monetary policy in some situations, in that fiscal policy measures can more directly target individual sectors of the economy where the problems are greatest, see woodford ( 2020 ). see, for example, sims ( 2016 ). this idea has also been put forward earlier in the swedish debate, see borg ( 2003 ). 7 we have to acknowledge that our forecasts during the past decade have systematically overestimated how quickly the interest rate can be raised. we have not been alone in this overestimation – the market forecasts have looked fairly similar ( figure 6 ). they were better than the riksbank's during the period 2011 - 2013, but the pattern is essentially the same – substantial overestimates and inaccurate forecasts. given this, it is quite natural that the interest rate forecast as indicator of the future repo rate has been devaluated somewhat. 13 one idea that i am personally positive to, is to publish not merely an interest rate forecast, but to supplement it with a promise to condition the policy on certain developments