It is likely that more information will have come in by then and we will have to update our forecasts. Monetary policy Monetary policy is expansionary Since the financial crisis worsened last autumn, monetary policy has been aimed at moderating the depth of the economic recession following in the wake of the crisis. The repo rate was cut from 4.75 per cent in September 2008 to an all-time low of 0.25 per cent in July 2009. The Riksbank has also supplied the banks with liquidity to counteract the negative effects of the financial crisis. In this section I shall discuss in slightly greater detail our reasoning at the most recent monetary policy meeting, and the risks I see of developments being better or worse than we forecast. In July we cut the repo rate from 0.50 to 0.25 per cent. The economic recession appeared likely to be deeper than the Riksbank had earlier forecast and we were expecting GDP growth to be slow over the coming years. Resource utilisation would therefore remain low throughout the entire forecast period. At the same time, the forecasts for underlying inflation were close to the inflation target of 2 per cent. We therefore considered that the repo rate probably needed to remain at this low level until autumn 2010 (see Figure 22). We also decided to grant loans to the banks of SEK 100 billion, with a twelve-month maturity and at a fixed interest rate.
BIS Review 98/2009  1  The financial crisis has so far been less serious in Sweden than in many other countries. The Swedish banks are well capitalised. But they are also to a large degree dependent on the securities markets for their funding and they have expanded substantially in the Baltic countries. The greatest risk for Sweden therefore lies with the banks’ credit exposure to the Baltic countries. International developments Slow global recovery Over the past year, the global economy has been hit by the most rapid economic downturn since the Second World War. Economic developments abroad are very weak this year and much weaker than we had previously anticipated. Since September last year, the Riksbank has gradually revised down its forecasts for global GDP growth in 2009 from approximately 4 per cent to around -1 per cent (see Figure 3). The forecasts in the most recent Monetary Policy Report are no exception, but for the first time they only involve a minor downward adjustment. There are numerous indications that the severe economic downturn has now touched bottom. During the spring there were increasing signs pointing to a slowdown in the heavy fall in world GDP. At the same time the financial markets have begun to function more efficiently, which is an important condition for ensuring that the economic recovery will begin. World trade has also begun to show signs of stabilisation during the spring, after the earlier heavy fall in exports.