When we made our most recent decision on the repo rate we had received the GDP figures for the fourth quarter, which were much lower than we and other analysts had expected. As I have already mentioned, this would indicate lower resource utilisation. But when we take into account the stronger labour market development, our conclusion in our most recent Monetary Policy Update is that resource utilisation is slightly higher than it was in February. But it is still low and will remain so for a large part of the forecast period. When we cut the repo rate to its current extremely low level in July last year, the situation on the financial markets was still critical, the economic cycle was in a much gloomier phase than now and the forecasts were much more pessimistic. During the autumn the positive signs increased and the forecasts were gradually revised up after numerous downward adjustments. The Riksbank had offered loans at fixed-interest rates with a one-year maturity in July, September and October. The purpose of these loans was to bring down general interest rates in a situation where the repo rate was assessed as having come down to what was in practice its lowest possible level. The fact that new loans were not offered in December was a first sign that economic activity was beginning to stabilise and that this type of unconventional measure was no longer necessary.
Barbro Wickman-Parak: The economy and the labour market Speech by Ms Barbro Wickman-Parak, Deputy Governor of the Sveriges Riksbank, at Skandinaviska Enskilda Banken (SEB), Stockholm, 29 April 2010. *  *  *  Sweden’s GDP fell by almost five per cent in 2009, compared with the previous year. We need to go back as far as the 1940s to find an individual year with a correspondingly large fall in growth. The large demand shock that followed in the wake of the financial crisis had an unavoidable and drastic impact on production and employment. It has been possible to alleviate these effects, but not to prevent them, despite forceful monetary policy measures and expansionary fiscal policy. Normally, changes in employment and unemployment occur two quarters after changes in production. This time, however, it appears as though the upturn in employment has already begun and unemployment has stopped rising, which is surprisingly early given the large fall in GDP. But unemployment is still high, and we are expecting a slow recovery in employment in the coming period. During the past three months unemployment has been around 9 per cent as a share of the labour force. Today I intend to talk about developments in the labour market in Sweden. I will begin by describing how employment usually varies over the business cycle and then discuss what is different this time. I shall conclude by discussing how we Executive Board members viewed developments in the labour market at our monetary policy meeting last week.