contributed in different ways personally, i believe that the monetary policy conducted is an important contributory factor to the fall in inflation. the fact that household indebtedness is taken into account in the monetary policy decisions – and the repo rate is thus held somewhat higher than the prospects for inflation and resource utilisation have justified – has probably made the krona stronger than it would otherwise have been and also held back domestic demand. when the krona appreciates, this has both a direct effect on inflation, which is pushed down when import prices fall, and an indirect effect in that the demand for swedish - produced goods and services is affected negatively. strong krona contributes to low inflation the possibility for monetary policy to steer the exchange rate is limited, but there is nevertheless reason to believe that the krona has become stronger than it would otherwise have been because of our leaning against the wind. if foreign exchange market participants see an increased difference between the yield on a swedish treasury bill and the yield on foreign equivalents, the swedish treasury bills and thus the swedish krona will be more attractive and therefore more expensive – that is, the krona will appreciate. although it is difficult to see clear links between observed exchange rates and interest rate differentials, a positive interest rate differential usually coincides with a strong krona ( see figure 1 ). the difficulty in seeing clear links is due to expectations having considerable significance for trade on the financial markets. the market rates and the krona rate do not change when the riksbank makes its repo - rate decisions, they change when market participants ’ expectations of future repo - rate decisions change. figure 1. interest rates and exchange rates percentage points and index, 18 november 1992 = 100, quarterly average interest rate differential ( left scale ) kix index ( right scale ) weaker krona - 1 stronger krona - 2 sources : national sources and the riksbank bis central bankers ’ speeches the effect on the krona has thus arisen when expectations of the repo rate have changed, rather than when repo - rate decisions have been made. the expectations have probably been affected gradually, as the significance of the indebtedness for the decisions has become clearer. moreover, exchange rates are at the same time affected by several factors that are connected with both expectations and market functioning. this makes it difficult to see with the naked eye how a particular monetary policy stance will affect the krona rate – unless it entails a large, sudden and unexpected deviation

. we make decisions on the current level of the repo rate at the monetary policy meetings. we also agree on which interest rate path is most appropriate at the present time. the decisions are made through a majority vote, where the chairman of the executive board has a casting vote, and they are announced in a press release. in addition to the executive board members, a number of employees from the monetary policy department and the communications secretariat take part in the meeting, as well as some advisers and legal advisers. in addition, the chairman and vice chairman of the general council regularly take part in the meetings and thus obtain a good insight into the work of the executive board. they both have the right to express opinions, but not to put forward proposals or take part in any decisions. in total, around 20 persons are usually present at the meeting. what happens at a monetary policy meeting? there is an agenda which states the order in which we will discuss the different items. the meeting usually begins with a brief update on how the financial markets have developed, including market expectations of the repo rate with regard to our meeting, and other new, important information that has been received in the last few days. this is followed by a summary of the main elements in the monetary policy report or the monetary policy update. after these introductory words from the civil servants, i and my colleagues go on to discuss economic developments over the coming three years. first we deal with economic activity and inflation abroad and in sweden. each person puts forward his or her view of the current economic situation and how the interest rate needs to be adjusted to attain the inflation target. there is no predetermined order as to who will begin the discussion. the discussion is fairly free at this stage. during the course of the process each one of us has formed his or her own opinion, but of course the formal decision is not made until the actual meeting. the chairman of the executive board usually concludes by summarising the discussions held and what proposals have been put forward regarding the current interest rate. after this we move on to the decision and vote. to give the general public insight into the decision - making process and to make it easier to assess our activities, we take minutes at the meeting which the bank then publishes. as of summer 2007, we also write the member ’ s names in the minutes. the minutes are published around two weeks after the monetary policy meeting. interest rate decision announced on the day after the monetary policy meeting a press