Altogether, the statistics indicate that the level of economic activity has improved in recent months after being weaker than expected at the end of last year. I believe that this indicates that the assessment of economic activity in Sweden that we made in the Inflation Report still largely holds true. As regards the labour market, it was noted in the Inflation Report that there had been an improvement and that there is a lot to indicate that employment will continue to increase in future. Since the Inflation Report, the number of employed has developed largely as we estimated in February. The supply of labour has at the same time increased slightly more than expected. The information received does not change the overall assessment that there has been a gradual improvement in the labour market situation, however. Our assessment in the Inflation Report was that inflation would increase in future although at a moderate rate. Recently, energy prices have increased more than expected. Electricity prices have gone up while the rising oil price has led to higher prices for petrol and heating oil. Overall, this has contributed to inflation being higher than forecast in the Inflation Report. In March, UND1X inflation increased to 1.2 per cent per year while CPI increased by 1.1 per cent. The outcome was 0.3 percentage points higher than forecast in the Inflation Report (for both CPI and UND1X).
The market may also have a different view from the Riksbank of how monetary policy will react to economic disturbances of various kinds. But we can express in different ways our assessments of policy as reflected in implied forward rates and in this way clarify our view in relation to that of the market. This also enables us to influence market expectations more directly in the short term. Let me illustrate this by some examples: In connection with the Inflation Report in October last year, we said that we thought that the implied forward rate path on that occasion gave rise to reasonable inflation developments in the coming years. Consequently, no great changes occurred in market expectations when we published the report (see Figure 2). In connection with the December report, we considered that the market was correct in anticipating an increase in the repo rate at the beginning of 2006 but that the rise might be a bit quicker in the winter and spring than that reflected by the path of implied forward rates. When the monetary policy decision was announced, the market reacted consistently this time as well by the implied forward rate path shifting in a way that reflected the expected interest rate increases taking place earlier (see Figure 3).