until a year or so ago, commodity prices were also developing weakly, but since then a relatively large upturn has occurred, while manufacturing activity has improved and global demand has increased. despite this, prices of manufactured goods have remained subdued. this somewhat contradictory, in historical terms, price picture is probably partly due to developments in china, where on the one hand the vigorous industrial expansion has led to a marked increase in the demand for commodities, while on the other hand the plentiful supply of low - wage labour has meant that production of cheap goods for the world market is accelerating rapidly. this clearly illustrates one of the conditions of globalisation, namely the increasing specialisation and increased utilisation of comparative advantages. these factors, among others, provide better resource allocation, increased productivity and greater efficiency, which in turn have a subduing effect on prices. the increasing strong international economic activity and the upturn in commodity prices indicate that international price pressure will increase gradually in the future. however, the globalisation process may mean that price increases remain moderate over the coming years, despite the economic upturn. china and india together have more than 2 billion inhabitants, which corresponds to one third of the total world population. so far, only around 10 per cent of the chinese population is estimated to be affected by the modern economy. this means that there is a very large unutilised labour reserve that could contribute to keeping down price increases for a long period of time. at the same time, it is important to remember that the integration of china and india into the global economy will not only lead to a large increase in the supply of cheap goods and services ; these countries will also contribute substantial demand for goods and services from the industrialised world. it is therefore no simple matter to assess the long - term significance of china and india for global price pressure. the integration of low - wage countries into the global economy through large - scale investment in export - driven growth is not a new phenomenon ; another example is japan, which developed in a similar manner after the second world war. however, the size of china and india means that the adaptation process could be much more profound and prolonged this time. moreover, this adaptation will occur in a global environment that is much more open and exposed to competition than has previously been the case. as yet, only a small percentage of the firms in the united states and the eu, including sweden, have moved their production to countries like china, india and the new eu members in

in the long run? do we need to take out the insurance provided by an early, small adjustment of the interest rate? or can we wait? that is something about which opinions can differ slightly. in my opinion, there is no reason as yet to reduce the expansionary effect on the swedish economy that monetary policy is currently exerting. a monetary policy adjustment will indeed be called for at some time in the economic upswing but i still see its timing as an open question. my colleagues and i on the executive board, as well as all those who analyse us, must follow the incoming statistics closely. new knowledge and new insights must be continuously woven into the analysis. maintaining price stability, as the law prescribes, accordingly means that the riksbank delivers its contribution to making growth in the swedish economy sustainable.