Word trade index, volume, Index 2005 = 100, seasonally-adjusted data 150  150 World trade index Forecast IMF (WEO April 2013)  140  140  Forecast IMF (WEO July 2013)  130  130  120  120  110  110  100  100  90  90 05  07  09  11  13  15  Sources: CPB Netherlands Bureau of Economic Policy Analysis  Manufacturing industry catching up It is probable that we will be able to continue to describe the Swedish economy as divided for a while longer, even though confidence indicators suggest that the situation in the manufacturing industry is returning to normal. However, given the prospects for higher global demand we should also expect Swedish exports to increase in the years ahead. In combination with a more expansionary fiscal policy in Sweden and a low repo rate, GDP growth can thus be expected to pick up and the current low rate of CPIF inflation can be expected to gradually increase. Some new statistics have been published since the monetary policy meeting in September that shed light on the current situation in the Swedish economy. CPIF inflation was 1.2 per cent in August, which was somewhat higher than expected. A revised version of the National Accounts has also been published which shows that GDP fell slightly more in the second quarter than indicated by the figures published earlier. The growth figures have also been revised down somewhat for 2011 and up somewhat for 2012.
To be able to evaluate our policy – not only the political authorities – but also financial markets and the general public need to know how we interpret our mandate, our view on how the economy works and trade-offs. Therefore, monetary policy must be transparent. Transparency and communication are also important for monetary policy effectiveness. Monetary policy works mainly through expectations and is only effective if the central bank is able to influence interest rate expectations. Professor Michael Woodford has expressed this very clearly in stating that monetary policy is “management of expectations”. “For not only do expectations about policy matter, but (…) very little else matters”. The central bank determines the shortest money market rates through the key rate. The shortest rates, however, are of limited importance. Economic agents’ spending depends more on their interest rate expectations. In recent years, Norges Bank has strived to achieve greater transparency with regard to its monetary policy strategy. As from the beginning of 2003, the Board has published its monetary policy strategy document for the next four months. The strategy was initially published at the end of the period to which it applied. Since June 2004 it has been published ahead of the period. While the document was initially an appendix to our Inflation Report, it is now the first section of the Inflation Report with monetary policy assessments. The strategy includes a recommended interval (red bars) for the policy rate over the following four months, conditional on economic developments that are broadly in line with our projections.