activity in the late autumn and winter was more marked than expected, mainly on account of weaker exports. manufacturers and households differ in their assessments of the future ; the former count on a turn for the worst, whereas consumer confidence has continued to improve. the direction in which confidence moves for these two groups will be crucial for prospects in the euro area. the optimistic trend among households has so far helped to mitigate the consequences of decreased external demand. the question is whether this will continue to be the case if industrial activity does not take a turn for the better. the japanese economy has not shown any clear signs of recovering, though in some respects it does seem to have stabilised. the future path here is still highly uncertain. all in all, the statistics point to an international trend in the next two years that is weaker that in the riksbank ’ s main scenario last autumn, though the differences should not be exaggerated. together with lower commodity prices, the weaker international activity should result in lower external price pressure. the outlook in 2000 and beyond is, however, very difficult to foresee. one uncertainty is the endurance of u. s. economic growth. will it be possible to maintain the high growth and low inflation despite the high level of share prices and the low saving ratio? another question concerns europe : will any slowdown in the united states be offset by a stable recovery in europe, underpinned by private consumption? finally, can the japanese economy finally shake off the profound crisis? a clearly positive outcome in any of these respects would provide conditions for a trend that is stronger than the main scenario ’ s. sweden ’ s currency and interest rate the lower inflationary pressure that was indicated by international developments last autumn was accompanied by a weakening of the swedish krona that could result in higher inflation. a more permanently weak krona can lead to higher inflation as a result of higher resource utilisation as well as higher import prices. in the december forecast the riksbank envisaged that the krona would appreciate in the coming two years. since then, however, the krona has strengthened more markedly than we expected : to date in 1999 the exchange rate has appreciated almost 5 per cent in terms of the tcw index and a little more than 6 per cent against the euro. a considerable part of the krona ’ s appreciation and stabilisation should be seen as a return to a more normal situation after the financial markets ’ very turbulent and volatile autumn. at the height of the unrest

specific monetary policy meetings, which it is envisaged will be held eight to 10 times a year. decisions about the repo rate, for example, will normally be taken at those meetings. a brief account of the board ’ s decisions is to be presented in a communique the day after the meeting ; a more detailed picture of the discussions will be available in the minutes of the meetings, which will be published with a time lag of six to eight weeks. as before, the riksbank will be publishing an inflation report four times a year, with a more comprehensive survey of inflationary pressure in the swedish economy in the coming 24 months. the executive board held its first monetary policy meeting last thursday and discussed inflation prospects. the board then decided to lower the repo rate 0. 25 percentage point and also lowered the corridor in which the repo rate lies by 0. 5 percentage point. the board ’ s decisions and the arguments behind them were published in a communique on friday. another feature of the new riksbank organisation is that each member of the executive board has an individual mandate and one vote. all the members are in a position to make speeches and give interviews on monetary policy in which they express their own view of the situation. it follows that the members can hold different opinions and may also express themselves somewhat differently about joint positions. today i shall base my remarks on the picture that was used for last week ’ s executive board discussion and summarised in the communique. when i elaborate on the communique it is my personal opinion i am expressing, though that does not mean that other board members were not of broadly the same mind. poorer international prospects in the course of last year, international economic prospects became a good deal worse. at the beginning of 1998 it was assumed that a weaker international trend could be offset by other factors, of which one was the good domestic demand. at an early stage, actually when the riksbank raised the interest rate in the late autumn of 1997, it was pointed out, however, that the international trend could be weaker than assumed in our main scenario and that the crisis could lead to a slowdown in sweden as well. the signals of an international slowdown that would also affect growth in sweden became increasingly clear. the riksbank therefore successively revised its forecasts in a downward direction and eased the monetary stance in june. this follows from our policy framework, which calls for a lower repo rate when inflation