Given the risks we saw before us - primarily a slightly stronger economic upturn - inflation was expected to be in line with the Riksbank's inflation target a couple of years ahead. This was why the repo rate was left unchanged. The outlook from May had not changed significantly at the meetings in June and August. However, we observed in August that economic growth appeared slightly stronger both in Sweden and abroad. This meant there was also reason to expect slightly higher resource utilisation. Moreover, the economic upturn had continued for a further couple of months. What is the present outlook for inflation over the coming years? My own assessment is that the conclusions drawn by the Riksbank at the previous meeting in August remain valid on the whole. It is likely, however, that some upward revision of the inflation forecast may be warranted compared with  BIS Review 51/2004  5  the May assessment, and perhaps even compared with the August forecast. In the short term the high oil price points to such a scenario. It also appears reasonable to expect somewhat higher resource utilisation over the coming years compared with in May and August. Factors that support this are the strong data releases during the summer and the more expansionary fiscal policy that now appears likely. Another factor is international developments, which appear to be strong. Slightly higher resource utilisation should lead to a slight increase in inflationary pressures over the coming years, compared with previous assessments. There are, of course, uncertainty factors.
Taken together it is possible that there now, as at the time of the monetary policy meeting in August, is reason to be somewhat more optimistic about economic growth abroad this year compared with the  BIS Review 51/2004  1  Riksbank’s assessment in May. The high oil price could indeed dampen the upswing somewhat and there have been some less positive signals over the summer from the United States, among other countries. But it appears that this will be countered by growth in other parts of the world, which seemingly will be more robust than forecast in May. In this context it may be worth noting that Sweden’s trade with countries such as China and India is still relatively small, but that the countries outside the OECD area (OECD-19) together account for about 20 per cent of Swedish export markets. This can be compared, for example, with the United States, whose share of Swedish exports is just over 10 per cent. If the performance of these countries is strong, it is of course of great significance for Sweden. Financial market developments during the summer have not entirely been in line with expectations. Equity price developments have been relatively weak. Both short-term and long-term interest rates have accordingly been weaker than we anticipated. The cause of this weaker development in interest rates has been uncertainty, primarily about the strength of the US economic upswing and the effect of the high oil price on global growth.