“Forward rates minus Prospera inflation expectations” shows nominal forward rates from 28 April for the coming year minus inflation expectations according to Prospera for the corresponding period. 9  See the box “What is a normal level for the repo rate?” in the Monetary Policy Report, February 2010 for a discussion of a normal level for the repo rate. See also Björn Lagerwall “Real interest rates in Sweden”, Economic commentary no. 5, 2008, Sveriges Riksbank, for a discussion of real interest rates. BIS Review 85/2010  9  Concluding thoughts Publishing our own repo rate path was a further step towards openness and transparency in the Riksbank’s monetary policy. Our forecast for the repo rate is reported in the same way as other important forecast variables. We can also use alternative scenarios to illustrate how the Executive Board may respond with its monetary policy if economic developments deviate from the main scenario. When the Riksbank introduced the repo rate path there were fears that many analysts would stop making their own forecasts and slavishly follow the Riksbank. The merit of having many different assessments would be lost. However, this has not been the case. There was also concern that we would avoid changing the repo rate path, even when this was motivated by changed conditions. This has not happened either. “The repo rate path is a forecast, not a promise”, this has been a message that the Riksbank has communicated all along.
The alternative scenarios for the repo rate show different monetary policy alternatives. What would happen to the economy if the Riksbank followed a repo rate path that was higher or lower than that in the main scenario? The consequences of various monetary policy alternatives can thus be compared. This can systematically justify the repo rate path chosen by the Riksbank. Introduction of repo rate path not entirely uncontroversial Many people welcomed the Riksbank’s decision to introduce its own repo rate path. However, there were also some misgivings. For example, there were fears that confidence in the Riksbank might be harmed if the actual repo rate in the future deviated from the earlier forecast. This was also the type of misgiving expressed when the Riksbank began publishing forecasts for inflation and growth. In addition, there was concern that the Riksbank might hesitate to change the repo rate forecast for reasons of prestige, even if circumstances indicated this was necessary. If there were fears that the Riksbank might be unwilling to change the repo rate path when the situation required, this fear has come to nought. Autumn 2008 is a very good example of this. Now, three years after its introduction, I believe I dare say that the repo rate path is regarded as a natural part of the Riksbank’s policy. I also believe that the discussion outside of the Riksbank is characterised more by long-term discussions on monetary policy than on individual decisions.