If our analysis of the prospects for production and inflation shows that our repo rate path needs to be revised in a particular way so that monetary policy is well balanced, then we will do this. What lessons can we learn? So far we have only limited experience of the new system and it is difficult to draw any farreaching conclusions. But perhaps we can learn some lessons for the future already at this stage. To begin with, it is important to note that, apart from the differences between different market agents’ expectations, there may also be differences between market agents’ own forecasts for the repo rate and their forecasts for the interest rate path the Riksbank will publish. It will be important for us to analyse what these differences are due to and how they should be interpreted in order to be able to predict the reactions at the times of the interest rate decisions. It is also important that we should constantly strive to become clearer in our communication to avoid it being interpreted in a way we did not intend. The decision to begin publishing interest rate forecasts in connection with each monetary policy meeting should be regarded in this context. There are some indications that certain market analysts interpreted a couple of speeches by Executive Board members during the spring in a way that was not intended. They appear to have drawn the conclusion that the interest rate path would be revised upwards less than had been assumed previously.
…companies’ costs rose Annual percentage change, seasonally adjusted data  8  8 Unit labour cost Hourly labour cost Productivity  7  7  6  6  5  5  4  4  3  3  2  2  1  1  0  0  -1  -1 94  96  98  00  02  04  Note. The broken line refers to the Riksbank’s forecast in MPR 2007:2  06  08  Sources: Statistics Sweden and the Riksbank  Figure 6. Rising food prices Annual percentage change  40  20 The Economist commodity-price index for food (left scale) Consumer food prices (right scale)  30  15  20  10  10  5  0  0  -10  -5  -20  -10  -30  -15 95  96  97  98  99  00  01  02  03  04  05  06  07  Sources: The Economist, Statistics Sweden and the Riksbank  8  BIS Review 111/2007  Figure 7. Rising inflation expectations Annual percentage change  4  4 CPI Households Companies  3  3  2  2  1  1  0  0  -1  -1 00  01  02  03  04  05  Note. The broken line refers to the Riksbank’s forecast in MPR 2007:2.