Judging from the surveys we make of inflation expectations, monetary policy in this respect has a very high level of credibility. •  The Riksbank also has the task of safeguarding financial stability. We see no problems with regard to financial stability at present. The fact that we emphasise developments in house prices and indebtedness does not concern financial stability. It is because we are concerned over how future inflation and growth might be affected by a possible sudden correction in house prices. Finally, I would like to stress that the monetary policy framework has functioned well. This is indicated in particular by the fact that inflation expectations are firmly anchored around two per cent. There are no signs in the financial markets that monetary policy is regarded as unclear. However, this does not mean we can rest on our laurels. We have one of the most open and transparent central banks in the world and we wish this to continue. The Riksbank’s forecasts assume, as I mentioned earlier, that the repo rate will develop in line with market expectations. I have raised the question of possibly going one stage further and instead reporting the Riksbank’s own forecast of interest rate developments, as they do in, for instance, Norway and New Zealand. Personally, I see it as quite natural that we should make forecasts of repo rate developments in the same way that we forecast a number of other variables.
Stefan Ingves: The economic situation in Sweden Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, at a meeting arranged by Handelsbanken, Malmö, 12 October 2006. *  *  *  Introduction Thank you for the invitation to come here and speak in Malmö! It gives me great pleasure to visit different parts of the country and explain what we do at the Riksbank. Today I intend to begin with a few words on the current situation in the Swedish economy and on inflation prospects. The Riksbank will provide a more in-depth analysis when the next Inflation Report is published, two weeks from now. I also intend to describe in more general terms how we conduct our monetary policy, that is, the Riksbank’s monetary policy strategy. In connection with this I shall take the opportunity to discuss the role of asset prices in the analyses. It has sometimes been claimed in the general debate that the Riksbank puts too much focus on asset prices and too little on inflationary pressures from the labour market, and I would like to refute this claim. I shall then briefly discuss financial stability, an area in which I have been active for many years, both at the Riksbank and during my time at the IMF in Washington. My hope is that you will today gain an idea of now we think and work to attain our statutory objective, maintaining price stability in Sweden. Let me begin with my views on the current economic situation.