BIS Review 35/2009  3  to a great extent to our policy framework that ensures the solvency of our economy and to our sound financial system. As for the local bonds market, January stood out for its large corporate bond issuances. Meanwhile, the interest rate demanded from corporate bonds in the secondary market has been falling through all of this year, and is currently approaching its levels of last September. This drop owes exclusively to the decline in the interest rates on Central Bank documents, because the spread between public and corporate securities has increased significantly since September, reflecting the same global risk factors already mentioned (figure 5). Conclusions The global financial crisis has hit hard credit markets around the world. In some unfortunate cases, economies that faced this debacle from a fragile initial position, with high indebtedness or with fast credit growth, have faced drastic adjustments in local asset prices, output, and employment, with dire consequences on their living standards. Thanks to the fact that we prepared for years as a country to confront deteriorations of the external environment, our monetary policy has been able to adopt a clear countercyclical stance to lessen the effect on our economy of the global financial meltdown. We have seen that the aggressive reductions in the MPR implemented by the Board since January have begun to reflect on the borrowing conditions faced by households and firms. It is reasonable to expect this to continue in the coming weeks, especially after the MPR cut of last week.
In the current situation with considerable uncertainty in the world economy, it is important, as I said at the beginning, that we are flexible and prepared to act quickly and forcefully. One expression of this is that we are expecting to all in all cut the interest rate by a relatively large amount during a short period of time. Less impact than usual to begin with The effects of the lower repo rate will probably initially be weaker than usual. As I mentioned recently, the confidence crisis and the uncertainty in the financial system have led to high risk premiums. This means that some market rates are not affected by the development of the repo rate in the same way as usual. For instance, it is not certain that the loan costs faced by households and companies will fall as much as they usually do when the repo rate is cut. To correct the problems in the fixed-income and credit markets it is necessary to implement other measures beside monetary policy. But this is, as I mentioned earlier, something we and other authorities are working on, both in Sweden and abroad. Other effects of the international financial crisis One important reason for the interest rate cut is that the crisis in the financial markets has led to higher loan costs for companies and households than we had anticipated in our assessment at the beginning of September. Access to credit has also declined.