However, this is for obvious reasons no simple task and there are no good examples of this from other central banks. Last spring, the Riksbank began work aimed at achieving this objective. One potential result of this work could be a development of the clarification from 1999. A clearer picture of which deviations are allowed would also make it easier to communicate our policy and to assess it in a purposeful manner. At present, policy is often assessed solely on the basis of historical averages for inflation. While this can act as a natural starting point, the discussion should be taken further and include how the outcome of the policy relates to the considerations taken to various  4/7  more transient price fluctuations. Real and financial developments should also be taken into account in contexts where they have affected the policy. I imagine that these are questions to which the Committee will wish to return in future, both as a result of the work conducted within the Riksbank and perhaps also as a result of the external assessment of monetary policy the Committee intends to make. The Riksbank is also holding discussions with external parties on a regular assessment, where a preliminary starting point would be comparisons between the assessments made by the Riksbank and other forecasters in order to provide a better basis for a correct discussion. The economic situation Let me now comment on our current assessment of inflation prospects and our interest rate decision yesterday.
During the spring this year, however, there were signals indicating that a slowdown was on the way. Moreover, in June growth data were released for the first quarter, which were weaker than expected by all economic forecasters. That prompted the Riksbank to revise down its growth forecast for 2005, as well as our outlook for future cost pressures. But we nevertheless stuck to our assessment that most factors – not least the expansionary economic policy – pointed to comparatively firm growth in the period ahead. 5/7  That now seems to have been a correct assessment. The statistics for the first quarter were revised up over the summer and thus were not quite as weak as they first appeared. During the second quarter GDP growth also rose, according to the data we now have. The performance is positive as regards both domestic demand – consumption and investment – and exports. Looking ahead, we expect that domestic demand will be a more important driving force than it has been so far in the cyclical upswing. However, demand is likely to begin to slacken by degrees as a result of ordinary mechanisms that dampen economic activity. One such mechanism is that interest rates rise as resource utilisation and cost pressures pick up. Previously, the forecasts in our main scenario have been produced on the basis of the assumption that the repo rate is constant during the forecast period.