interest rate decision in september let me move on to the stance i took at the most recent monetary policy meeting around a month ago. i, like the rest of the executive board, then voted to raise the repo rate by 0. 25 percentage points. at the same time, my assessment was that the forecast for the repo rate that we made in june still appeared reasonable. today i shall return to why i made this assessment. increased uncertainty abroad … on the whole, my view in september was that international growth was good and had not changed significantly since june. but this does not prevent the view of growth in some individual countries having changed in important respects. in september our assessment was that growth would be lower than we had expected in june, in the united states in particular, but also in europe. at the same time, developments were slightly stronger in a couple of our neighbouring countries and in several emerging markets. however, the international risk outlook had changed gradually in connection with the rising unrest in the financial markets. the change in the risk outlook largely originated in the united states. there the problems in the housing market had worsened and according to several statistics house prices in the united states fell on average, measured as an annual change. the question we asked ourselves at the september meeting was to what extent the problems would spread and slow down activity in the rest of the us economy. the unrest in the international financial markets in the wake of the us subprime crisis has also led to an increase in the price of risk, which means for instance that it has become more expensive to borrow. in this way the effects can be compared to the effects of tighter monetary policy. but apart from the changed pricing, the uncertainty has also led to greater caution in general. this also has a certain dampening effect on economic activity. in sweden, the effects of the unrest in the financial markets have been more limited than in, for instance, the united kingdom, the united states and germany. over the past weeks there appears to have been some stabilisation. but the us mortgage market may present further surprises. if, for instance, house prices were to fall more than expected, this could once again increase the unrest in the markets and lead to rising interest rates and falling stock prices, not only in the united states. in a slightly longer perspective, this can also slow down growth in the us economy and even have contagion effects in europe and the rest of the world. … but strong developments here at home

if one looks at developments in the swedish economy, our assessment in september was that it was actually stronger than in june. here the labour market and productivity deserve special attention. these are two of the most important factors, which determine how cost pressures and thereby inflation will develop. it was clear in september that the labour market had tightened further. the increase in the number of persons employed had been around as large as we were expecting in the june report. however, the number of people in the labour force had not increased at the same rate we expected then. this meant that unemployment was also lower than we had predicted. given these signs of a tighter labour market, it was fairly reasonable to believe that wages would increase more rapidly in future than they had done in previous years. but we could note that this was not yet visible in the statistics. the picture painted by the national mediation office ’ s statistics shows very moderate increases. but as i pointed out at our september meeting, it is probable that this picture will change when the new central wage agreements signed in the spring begin to make their mark in their respective sectors. and just as for developments in the labour market as a whole, this is something we follow closely. as i have just noted, it is now clear that an increasing number of people are working. it is normally the case that when many new people obtain work towards the end of an upturn phase of the economic cycle, the work is a little less efficient, that is, productivity growth declines. and this is just what we have seen during the first half of this year. the fact that this would happen is something we have foreseen for a long time, although not that it would happen as soon and as quickly as it actually has. this has also led to the forecast for productivity for the whole of 2007 being lowered as early as june. but i did not see any reason to change the forecast for productivity for coming years ; my assessment was still that productivity would recover. this was because i viewed the slowdown in productivity as temporary. but productivity is a factor that is difficult to assess – there is a risk that the slowdown will be prolonged and lead to stronger cost pressures. this was one of the risk factors we noted in the june monetary policy report. the assessment in september was that food prices would contribute to higher inflationary pressures than we had previously anticipated. if we look at how inflation has developed in recent months, the forecasts from june have been relatively accurate. in august