Taking a euro area perspective, these results are interesting in at least two respects. First, the level of US interest rates are an essential feature of the world economy and the economic and financial environment of the euro area. Second, the experience of other major central banks is a natural benchmark for the design and the monitoring of our own policies, on which I would like to share with you a few thoughts. The predominant objective of our first wave of unconventional measures, which we have labelled the “fixed rate full allotment” supply of liquidity, was to ensure that liquidity shortages do not escalate into defaults, especially in the financial sector. This has mainly consisted in ensuring the correct provision of liquidity to the banking sector against the backdrop of a major confidence crisis. BIS central bankers’ speeches  1  Yet, by the end of 2010 the crisis had taken on a new form. The fiscal constraint became binding in a number of periphery countries. Investors started to price in sovereign credit risks. By 2011, it appeared clear that investors were also factoring in the risk of a euro area break-up. This, in turn, entailed an increased degree of market fragmentation within the euro area, with borrowers facing different credit conditions depending on their country of origin. Our Outright Monetary Transactions (OMT) programme was specifically designed to reaffirm the irreversibility of the euro. The OMT allowed investors to discard a specific form of systemic risk.
Another observation is that the Executive Board as a collective is now more involved in the forecasting process than it was a few years ago. This is largely because we have chosen to publish our forecast for the repo rate. I shall return to this shortly. A third observation concerns the logic of the process. We try to deal with that which is independent of our own monetary policy at an early stage. Sweden is a small, open economy, so the international forecasts can be settled without taking into account what may later crystallise into a well-balanced Swedish monetary policy. The current situation in the Swedish economy is also largely independent of what the Executive Board determines at the next meeting, in that it takes time before monetary policy has an effect on the economy and inflation. But please note that we have a relatively broad definition of the "current situation”. The National Accounts are published with a lag of almost one quarter. They are our most important source of statistics regarding the real economy. This means that we often do not know at the start what the outcome was for the economy during the previous quarter. This means that an assessment must be made for both the previous quarter and the current quarter. We use various indicators that are published on a monthly basis to make this assessment. So what is the actual process for making the forecasts? It usually starts around eight weeks before the monetary policy meeting (see Figure 1).