When we make forecasts for the labour market, we also have to take into account the fact that the labour supply will increase when economic activity strengthens. This is a normal pattern. The Government’s policy will probably also mean that the number of persons in the labour force increases slightly more than has been usual in previous economic upturns. The fact that the labour supply increases will mean that unemployment will fall at a slower rate than employment rises. With regard to inflation, we expect it will fall over the coming six months. It is the large fluctuations in energy prices that make an impact on inflation in the short term. We cannot – and should not – do much about this type of short-term fluctuation in inflation. In the longer term we are expecting inflation to rise and be close to 2 per cent two years ahead. One might wonder, if inflation is now expected to fall in the short term, what reason do we have to believe that it will rise to 2 per cent in the longer term? One important reason for this forecast is that productivity growth should be more modest in future. Over the past two years we have been able to note that productivity growth has slowed down compared with the years before that. This indicates that productivity growth is about to slacken to a more normal level, seen from a long-term perspective.
As a complement to our statistical studies of productivity and other subjects, we will also create channels for direct contacts with companies. This is to improve our knowledge of the current status and current events in the economy. At the same time, I would like to point out that one should not have overly high expectations that the work will lead to significantly more accurate forecasts. We will probably have to continue to live with some surprises in the economy. This applies in particular when structural changes in the economy change the historical pattern. But improving understanding of what has happened is still important. The cause behind fluctuations in inflation and growth is important for how monetary policy should be designed. The high productivity growth has meant that the Riksbank has been able to conduct an expansionary monetary policy. In other words, the economy has managed a high growth rate without prices rising much. Under these circumstances a natural question might be whether we should have cut the rate more in order to push up inflation towards the target more quickly? With hindsight it is fairly easy to note that we could possibly have made the interest rate cuts at a slightly faster pace when we began making cuts a few years ago. We have already noted this in various contexts and it is hardly controversial. On the other hand, I do not believe that it would have been wise to cut the rate much more in recent years.