The Riksbank’s forecasts are therefore based on the prices of forward contracts for oil, that is, the price of delivering oil in the future. This means that at the monetary policy meeting in July we were assuming a price for crude oil of USD 130-140 per barrel during the forecast period. Since April the oil price has fluctuated substantially. First it rose to USD 147 a barrel and since then it has fallen. At the beginning of this week the oil price was USD 113 a barrel. 2  BIS Review 100/2008  Food prices have also risen substantially in the world market, particularly over the past year. Rising incomes, urbanisation and changes in diet lead to an increase in the demand for food. As oil becomes more expensive it becomes profitable to use maize and other grains to produce biodiesel and biofuels. Furthermore, the production costs for foods are rising. Other factors such as supply shocks and speculation in future price changes also affect developments. Our assumption in June was that food prices would not continue to increase, but would stabilise at a high level. Since the beginning of July food prices have fallen. High international inflation and rising inflation expectations The upswing in commodity prices in recent years has in turn led to an increase in inflation around the world. In the United States it has risen to 5.6 per cent and in the euro area it rose to 4.0 per cent in July 2008. It has risen much more in several emerging economies.
To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirms the need to closely monitor the risks to the outlook for  2  BIS central bankers’ speeches  price developments over the medium term and to be prepared to provide further monetary policy accommodation, if needed. Monetary policy is focused on maintaining price stability over the medium term and its accommodative stance contributes to supporting economic activity. However, in order to strengthen investment activity, boost job creation and raise productivity growth, other policy areas need to contribute decisively. In particular, the determined implementation of product and labour market reforms as well as actions to improve the business environment for firms need to gain momentum in several countries. It is crucial that structural reforms be implemented credibly and effectively as this will raise expectations of higher incomes and encourage firms to increase investment today and bring forward the economic recovery. Fiscal policies should support the economic recovery, while ensuring debt sustainability in compliance with the Stability and Growth Pact, which remains the anchor for confidence. All countries should use the available scope for a more growth-friendly composition of fiscal policies. The Investment Plan for Europe which the European Commission announced on 26 November 2014 will also support the recovery. We are now at your disposal for questions. BIS central bankers’ speeches  3