But many ups and downs and a lot of work remain before we can declare this crisis officially over. And it is in the light of this that we must formulate our monetary policy. The financial crisis has affected the conditions for our actions – how we need to work to manage our two main tasks. As long as the conditions require it, we will also take whatever measures necessary to safeguard financial stability. When necessary we will also act with greater flexibility, speed and force than usual regarding our monetary policy. The latter also affected our most recent interest rate decision and I will now go on to talk about this in more detail. The most recent interest rate decision As I have already mentioned, economic activity has weakened unusually quickly. In addition, there is considerable uncertainty regarding economic developments. To dampen the fall in production and employment, and to manage the inflation target of 2 per cent, our assessment was that it was necessary to adjust the interest rate forecast downwards and to quickly cut the interest rate at the same time. We therefore decided just over two weeks ago to cut the repo rate from 2 per cent to 1 per cent. We are also assuming that the interest rate will remain at around the same level over the coming year, with some probability of a further cut being necessary. But the prospects are brighter further ahead.
The broken line represents the Riksbank’s forecast  12  Source: The Riksbank  Real repo rate… 4  4  Real repo rate February December  3  3  2  2  1  1  0  0  -1  -1  -2  -2  -3  -3 04  05  06  07  08  09  10  11  12  Source: The Riksbank  BIS Review 23/2009  13  Downward revision in Consensus forecasts for GDP growth 2009 Annual percentage change 7  7  6  6  5  5  4  4  3  3  2  2  1  1  0  0  -1 -2  Japan USA Eastern Europe  -3 08-Jan  08-M ar  -1  Euro area Asia Latin America  -2 -3  08-M ay  08-Jul  08-Sep  08-Nov  09-Jan  Source: Consensus  Sharp fall in orders and exports Annual percentage change, seasonally-adjusted data 35  35 Orders received, export market Exports  30  30  25  25  20  20  15  15  10  10  5  5  0  0  -5  -5  -10  -10  -15  -15  -20  -20 80  82  84  86  88  90  92  94  96  98  00  02  04  06  08  Note.