Annual percentage change 5  Interest rate costs Food  4  5 4  Energy Good  3  3  Services 2  2  CPI  1  1  0  0  -1  -1  -2  -2  -3  -3  -4  -4 08  09  10  11  12  13  Source: Statistics Sweden  All in all, given the relatively weak development abroad, it is thus not difficult to understand the division in demand that has marked the Swedish economy in recent years. What can monetary policy do today? Swedish monetary policy cannot do anything about the causes of the weak demand from abroad, but it can mitigate the effects on the Swedish economy. How low the repo rate needs to be, and how quickly inflation should rise towards the target are ultimately questions of judgement. I believe that it is appropriate that the Riksbank has let the repo rate remain at one per cent since the end of last year in order to boost the Swedish economy and to get inflation to rise to 2 per cent. According to the forecast, the repo rate will remain at this level until the end of 2014. In the forecast, the real interest rate will remain negative until the beginning of 2015, which shows that monetary policy is expansionary.
BIS central bankers’ speeches  1