If one looks at historical patterns, the actual repo rate has often shown a rather different development to what market agents were expecting, according to forward rates (see Figure 1). The fact that market expectations are now below the Riksbank’s forecast for the repo rate is of course worth analysis and consideration. But one must remember that this is just a snapshot image, and that it is primarily in the longer run – where uncertainty is greatest – that the differences are really tangible. It is also worth mentioning that many forecasters are much closer to the Riksbank’s view of the repo rate. Figure 1 The repo rate and forward rates  Sources: Reuters EcoWin and the Riksbank. It should be added that the Riksbank is of course also “wrong” sometimes, and that the actual policy turns out to be quite different from what we had forecast. The repo rate path is, after all, a forecast and not a promise, as we often point out. It is not reasonable to believe  BIS Review 134/2010  3  that we and market agents will always reach the same conclusions, and the differences do not necessarily express any form of confidence crisis. Inflation expectations are wellanchored around our target, which in my opinion is the most important indication that the market has confidence in monetary policy. So why did I support the repo rate path we published in the September Monetary Policy Update?
In other words, a monetary policy committee must not only agree that it can disagree, it must also agree on which way it is okay to disagree. But these differences also contribute to the diversity that leads to better decisions. There is no one who holds the key to the truth with a capital T, and when views and assessments are contrasted with one another there is less risk of bad decisions. There is some support for this in academic research, where one result is that a group of persons who process information and reach their decisions in different ways can outperform even very skilful individuals when it comes to solving complex tasks. 1 One could say that diversification trumps specialisation – it is the differences that create added value. 1  See, for instance, Alan S. Blinder, “Monetary Policy by Committee. Why and How?” European Journal of Political Economy 23 (2007). 6  BIS Review 134/2010