In the recent period, the Swedish economy has mainly been driven by firm export demand. This has generated healthy profits for companies and higher incomes for employees, and we are now at a stage where domestic demand is expected to take over as the driving force in the economy and employment to rise. But there is a risk that an improvement in the labour market will be held back by structural factors, i.e. that production and the labour market will not adapt quickly enough to changed conditions abroad, which could impair the prospects for a pick-up in domestic demand. In addition, we have recently seen signs of somewhat weaker economic activity than we had previously expected. Should this tendency prove to be more persistent, there is a risk of an economic downturn, with a softer inflation outlook as a consequence. I have previously noted a risk that rising interest rates and falling house prices could lead to unnecessary strains in the real economy in the long run, with a drop in demand as a result. This remains a risk, but in a situation with clearly weakening economic activity it may prove necessary to conduct monetary policy in a more expansionary direction. However, we are currently in a position where the uncertainty regarding what course the developments will take is still considerable. Therefore, we will as usual be monitoring the situation very closely up to the next monetary policy meeting.
With prices remaining stable, interest rates low and a good level of competitiveness, our economy is well equipped to resume a brisker growth trajectory in line with the global economy. 4  BIS Review 30/2005  As in the past, however, the international environment remains fraught with uncertainty at both the economic and monetary level. The independent course steered by the National Bank has made it possible to create a monetary framework conducive to the development of our economy. This success hinges not only on the correct interest rate decisions, but also on the credibility conferred upon us by our autonomy of action and by sufficient resources for intervening in the markets. It is in the nation's interest to preserve this achievement. Thank you for your attention, and for your interest in the Swiss National Bank and its activities. BIS Review 30/2005  5