“Forward rates minus Prospera inflation expectations” shows nominal forward rates from 28 April for the coming year minus inflation expectations according to Prospera for the corresponding period. 9  See the box “What is a normal level for the repo rate?” in the Monetary Policy Report, February 2010 for a discussion of a normal level for the repo rate. See also Björn Lagerwall “Real interest rates in Sweden”, Economic commentary no. 5, 2008, Sveriges Riksbank, for a discussion of real interest rates. BIS Review 85/2010  9  Concluding thoughts Publishing our own repo rate path was a further step towards openness and transparency in the Riksbank’s monetary policy. Our forecast for the repo rate is reported in the same way as other important forecast variables. We can also use alternative scenarios to illustrate how the Executive Board may respond with its monetary policy if economic developments deviate from the main scenario. When the Riksbank introduced the repo rate path there were fears that many analysts would stop making their own forecasts and slavishly follow the Riksbank. The merit of having many different assessments would be lost. However, this has not been the case. There was also concern that we would avoid changing the repo rate path, even when this was motivated by changed conditions. This has not happened either. “The repo rate path is a forecast, not a promise”, this has been a message that the Riksbank has communicated all along.
At the same time, we continue to expect euro area economic activity to benefit from ongoing growth in the global economy as well as from the accommodative monetary policy stance and the various measures taken to support the functioning of the financial sector. This assessment is also reflected in the September 2011 ECB staff macroeconomic projections for the euro area, which foresee annual real GDP growth in a range between 1.4% and 1.8% in 2011 and between 0.4% and 2.2% in 2012. Compared with the June 2011 Eurosystem staff macroeconomic projections, the ranges for real GDP growth in 2011 and 2012 have been revised downwards. In the Governing Council’s assessment, the risks to the economic outlook for the euro area are on the downside, in an environment of particularly high uncertainty. Downside risks  BIS central bankers’ speeches  1  mainly relate to the ongoing tensions in some segments of the financial markets in the euro area and at the global level, as well as to the potential for these pressures to spill over into the euro area real economy. They also relate to further increases in energy prices, protectionist pressures and the possibility of a disorderly correction of global imbalances. With regard to price developments, euro area annual HICP inflation was 2.5% in August 2011, according to Eurostat’s flash estimate, unchanged from July. We have now seen inflation rates at relatively high levels since the end of last year, with higher energy and other commodity prices as the main drivers.