1. Monetary Policy Update April 2009

2. Lower repo rate necessary to subdue the fall in production and employment and to attain the inflation target of two per cent The Riksbank will continue to take the measures required to safeguard financial stability

3. Repo rate cut to 0.5 per cent Economic downturn worsening Low repo rate for long period of time Positive growth in 2010

4. Low repo rate for long period of time Per cent, quarterly average Source: The Riksbank Note. The uncertainty interval does not take into account the zero bound.

5. Economic downturn worsens in Sweden GDP, quarterly changes in per cent calculated as annual rate, seasonally-adjusted data Sources: Statistics Sweden and the Riksbank

6. World economy continuing to deteriorate GDP, quarterly changes in per cent calculated as annual rate, seasonally-adjusted data Sources: Bureau of Economic Analysis, Eurostat and the Riksbank

7. Weak household consumption and retail trade sales Annual percentage change Note. The first quarter of 2009 refers to the average of outcomes in January and February. Source: Statistics Sweden

8. Rising unemployment Per cent of labour force, seasonally-adjusted data Note. Broken lines refer to the Riksbank’s forecasts. Sources: Statistics Sweden and the Riksbank

9. Positive growth in 2010 Better functioning credit markets Low interest rates and expansionary fiscal policy Confidence will return among households and companies Households will buy more capital goods Investment will rise from a low level

10. Purchasing managers’ index in USA, euro area and Sweden Index over 50 indicates growth in industry Sources: Institute for Supply Management, NTC Research Ltd and Swedbank

11. Inflation kept up Annual percentage change Note. Broken lines represent the Riksbank’s forecasts. Sources: Statistics Sweden and the Riksbank

12. Continued financial crisis Difference between 3-month interbank rate and expected policy rate (basis spread), basis points

13. How far can the repo rate be cut? Probably not much further Only slight effects from further cut Possibly negative effects on functioning of financial markets Limited experience of how financial markets function when interest rates are low At present appropriate to cut repo rate to 0.5 per cent

14. The Riksbank has other tools If economic activity weakens more than expected, other measures can be taken to actively support a low repo rate during a long period of time: Purchase of government bonds to keep down long- term interest rates Purchase of mortgage bonds to influence mortgage rates Continued measures to ease supply of credit

15. Interest rate path a forecast – not a promise Per cent, quarterly average Source: The Riksbank Note. The uncertainty interval does not take into account the zero bound.

16. Repo rate cut to 0.5 per cent Economic downturn worsening Low repo rate for long period of time Positive growth in 2010