The main downside risk - lower inflation than in the main scenario - lay in favourable surprises of the kind we have seen earlier in the relationship between growth and inflation. So how does this picture from October stand up today? Fairly well, in my opinion. BIS Review 107/2000  4  Price movements to date have been broadly in line with the forecast. And as we expected, there have been signs that international activity is slackening. This is most evident in the United States but even some slowing of growth in Europe seems likely in the coming years. In Sweden, too, there are indications that activity has become calmer. Growth still seems to be high but households as well as firms have become less optimistic about the future. Order books are not growing as drastically as before. In general, this is in line with what we foresaw in October. But of course we are keeping a close watch on developments. A more dramatic course cannot be ruled out, particularly in the United States. The oil price remains high and the krona has weakened. So in these respects, developments are more in line with the risk spectrum than with our main scenario. Share prices, as we all know, have been volatile in the past six months but the fall to date is not a major cause for concern.
Lars Heikensten: Monetary policy in Sweden  Speech by Mr Lars Heikensten, First Deputy Governor of the Sveriges Riksbank, at the Autumn Conference of the Centre for Business and Policy Studies, held in Stockholm on 17 November 2000. *  *  *  Thank you for the invitation to talk about monetary policy. If my memory serves me right, this is the fifth autumn conference I have addressed as deputy central bank governor. For me, the annual opportunity of discussing monetary policy with some of our country’s leading economists and economic observers has become a very enjoyable tradition. I shall begin, as usual, with a brief account of the past year, taking 1999’s October assessment as my starting point. Even though our appraisal of inflation at that time was relatively optimistic, the outcome has been better than we foresaw. Developments in the past year raise questions about the economy’s inflation propensity. That topic was already up for discussion at last year’s conference, though the reason then was that several leading observers considered the risks of inflation were being underestimated by the Riksbank. A third matter I shall be talking about is our monetary policy guidelines. In the past year we have been criticised for basing repo rate decisions on appraisals that are too narrow. Finally, I shall be looking ahead and commenting on our view of inflation in the coming years.