For instance, we need to consider to what extent it is the Riksbank that is best suited to carry out this type of measure and whether it might instead be a task for a government agency. Summary I would like to summarise my speech as follows: Resource utilisation is falling rapidly and is at an unusually low level. All of the measures of resource utilisation that we have provide the same general picture. But it is difficult to ascertain how low it is and when it will turn around. Different measures paint different pictures on this issue. The GDP gap implies that resource utilisation will fall to minus 4-5 per cent at the beginning of 2010 before it turns around, and the employment gap points to resource utilisation falling to minus 3 per cent in 2011 before the labour market begins to improve. However, in both of these cases the measures are based on very uncertain estimates of the available resources in the economy. It is also difficult to ascertain what consequences the low resource utilisation will have for inflation and monetary policy. The assessment we made at the most recent monetary policy meeting was that the policy rate ought to be cut to 0.5 per cent. With this cut and the low level of the policy rate that we envisaged, resource utilisation would show an upturn and underlying inflation would be close to two per cent during the forecast period.
But the connection probably still remains, albeit in a weaker form. This means that in our monetary policy we also have to take into account what effects resource utilisation has on inflation in the slightly longer term. I will return to this issue later on. Different measures of resource utilisation There is no clear-cut means of defining resource utilisation, nor of measuring it. When one tries to measure resource utilisation one is faced with different alternatives. For example, one can draw conclusions regarding resource utilisation in the economy by comparing output or employment with a trend, normal or ideal level. Examples of this approach include the GDP gap, the employment gap and the flexprice gap. Another alternative with regard to measuring resource utilisation is to use as a base responses to direct questions put to companies regarding, for instance, their utilisation of labour and capital. Both of these approaches have inherent difficulties. In the first case, one must relate actual output or employment to a trend, normal or ideal level that is difficult to determine, and in the second case one must rely on the companies’ own assessments of their resource utilisation. GDP gap A common means of measuring resource utilisation is to relate actual GDP to a long-term or trend level of GDP. This GDP level is also often called potential GDP, despite the word potential implying that GDP cannot be greater than this level.