this spectrum of risks is balanced ; the downside risks associated with international developments are balanced by the upside risks from the weak exchange rate and a less favourable relationship between growth and inflation in a wide sense. as developments unfold, that balance can change so that interest rate policy may need to be adjusted in one direction or the other. that would be something the executive board would have to discuss as usual at its future monetary policy meetings. i particularly want to underscore that perhaps it is more than usually important to pay close attention to the future course of events. in the light of the analysis in the inflation report, at yesterday ’ s meeting the executive board decided to leave the repo rate unchanged.

, share prices fall, bond rates are unchanged or rise, short - term interest rates decline and the price of gold moves up. exchange rate shifts of this type are normally transient. the krona has in fact strengthened just recently as markets have become more stable. the it bubble has burst at the time of our previous meeting in march, economic activity was slowing generally throughout the world but above all in the united states. this tendency had also reached sweden. important factors behind the almost simultaneous and marked deterioration of the global picture and perhaps particularly in the united states were, for example, energy price increases, rising interest rates, falling stock markets and the sudden downturn in corporate investment. the prospect of lower profits, a clear slump on the world ’ s stock exchanges and more pessimistic expectations have led to a marked worsening of investment activity. to illustrate how they believe the american economy will develop, observers have resorted to letters of the alphabet. a v implied a quick recovery, where the favourable outlook for profits meant that the accumulated imbalances would not be a major problem. this alternative rested on a persistently strong belief in a high potential growth rate, with investment in new technology continuing to play an important part. this was the path that most observers counted on last spring. it was, however, questioned by others, particularly outside the united states. in general, they foresaw a more protracted, u - shaped recovery. time would be needed for the adjustment of the over - investments that excessive optimism had generated. there is a lag before measures of economic policy have tangible effects. in some quarters, finally, there is an even more pessimistic scenario, an l. this envisages that growth in the u. s. economy comes more or less to a halt as the imbalances undergo a painful correction and measures of economic policy have little effect. in my discussion with you last spring i believe i likened my version to a banana. this was because the riksbank believed that in many respects the cyclical path would follow the normal pattern. an expansionary phase is usually followed by a period of slacker activity. the longer the upward trend has lasted, the more likely it is to take a pause. that made it difficult to believe in the v - shaped scenario that the financial markets were mainly counting on at that time. the path has been accentuated by the recoil from the excessive optimism that had attended the technological breakthrough and given rise to the notion