Let me now conclude by wishing all of you a fruitful and enriching conference ahead and a productive process tapping the international capital markets down the road. Thank you. 2  BIS Review 35/2007
Was the adjustment of the interest rate path in June extreme? Here I intend to focus primarily on the reactions in the financial markets following the monetary policy meeting in June. As you will remember, the Riksbank at that time presented a new forecast for the repo rate. The forecast was on average 50 points above the earlier forecast that we published in our February report. We were then criticised because our revision of the repo rate forecast was greater than one would normally expect during such a short period of time. One observation is that while the revision was large, it was not in any way extreme. If one analyses how the implied forward rates are revised, one can see that the probability of these being revised to a greater degree than the Riksbank's revision of the repo rate forecast between the February and June reports is approximately 20-25 per cent. This means that on every fourth or fifth occasion the market expectations have been revised more than the Riksbank’s revision in June. What had the market agents expected? Another question is how the market agents’ expectations of interest rate developments changed after we had published our forecast in June. Figure 10 shows the expectations of monetary policy that can be understood from the implied forward rates.