It is hard to see that there are any major advantages for the Swedish households of a significant part of their incomes being used to fund investments abroad, which in reality is what this means. To me, this is another sign that demand is too low in Sweden. Low demand is restraining consumption so that saving is high, and is also restraining investment. My interpretation of developments regarding the labour market, inflation and the current account is thus that demand in the Swedish economy has been far too low since Sweden was hit by the fall in demand in the autumn of 2008. Although both monetary policy and fiscal policy have been used to counteract the fall in demand, this has not compensated in full for weak economic development abroad and for the weakening optimism of the households and companies. The fact that unemployment was relatively high in Sweden already prior to the financial crisis (as can be seen in Figure 2, unemployment has averaged just over 7 per cent since 1999) and that the current account surplus has been substantial since the second half of the 1990s, raises the question of whether aggregate demand has been weak in an even longer perspective.
I am mindful of the fact that Zanaco’s base rate is one of the lowest in the country but would like to urge Zanaco to live by its slogan, “big, strong & reliable” by being proactive and set an example of supporting our efforts in developing the economy. At the central bank, we have continued to do our best, in support of government’s effort of reducing inflation, stabilising the currency and implementing sound monetary policies. With inflation of 8.4%, the lowest in the last 30 years in the history of our country and other positive developments, we surely would not be asking for the impossible for commercial banks to respond favourably and reduce their lending interest rates further. BIS Review 72/2006  1  At this point, ladies and gentlemen, I would like to declare the Zanaco bill muster officially launched. Thank you. 2  BIS Review 72/2006