1. Monetary Policy Update December 2008

2. Repo rate cut to 2 per cent Repo rate expected to remain at same level during 2009 A large interest rate cut is necessary to dampen the fall in production and employment and meet the inflation target of two per cent

3. Repo rate cut Economic prospects weakening rapidly Inflation falling below target Unusually rapid economic downturn requires unusually large and rapid monetary policy measures Growth will recover in 2010

4. Economic activity weakening rapidly Purchasing managers index, manufacturing industry, index = 50 means unchanged activity Note. Vertical line at September. Source: EcoWin

5. Retail trade sales falling Annual percentage change Note. Vertical line at September. Seasonally-adjusted data. Source: EcoWin

6. Rapid weakening of labour market Redundancy notices and job vacancies, seasonally-adjusted data, thousands Source: Swedish Employment Service Note. Refers to preliminary outcomes for November

7. Rapid weakening of labour market Redundancy notices and job vacancies, seasonally-adjusted data, thousands Source: Swedish Employment Service Note. Refers to preliminary outcomes for November

8. GDP slowing down globally Annual percentage change, calendar-adjusted data Sources: the IMF, Statistics Sweden and the Riksbank Note. Broken lines and columns refer to the Riksbank’s forecasts.

9. GDP forecast for Sweden adjusted downwards Quarterly growth calculated as an annual rate, seasonally-adjusted data Note. Broken lines refer to the Riksbank’s forecasts Sources: Statistics Sweden and the Riksbank

10. Unemployment rising rapidly Percentage of labour force, seasonally-adjusted data Note. Broken lines refer to the Riksbank’s forecasts, 15-74 years. Data prior to 1993 is spliced by the Riksbank Sources: Statistics Sweden and the Riksbank

11. Lower oil price pushes down inflation Brent crude oil, USD per barrel Sources: Intercontinental Exchange and the Riksbank

12. Drastic weakening of the krona TCW index 18 November 1992=100 Source: The Riksbank Note. Outcomes are daily rates up to 1 December 2008 and the forecasts refer to quarterly averages. Broken lines refer to the Riksbank’s forecasts.

13. Inflation below the target CPI, annual percentage change Sources: Statistics Sweden and the Riksbank

14. Large difference between repo rate and market rates Per cent Sources: Reuters EcoWin, Statistics Sweden and the Riksbank

15. Unusually large cut New information, analyses and assessments indicate that the repo rate should be as low as around 2 per cent Rapid weakening in economic activity Increased pessimism among companies and households Reduced impact of monetary policy The risks in acting too forcefully are less than the risks in ”waiting and seeing”

16. Measures for the financial system Loans (against collateral) in SEK and USD Changed collateral requirements Liquidity support to Kaupthing and Carnegie Commercial paper

17. Recovery will begin in 2010 Restored confidence in the banking system Reduced insecurity Increased demand from abroad Weaker krona Expansionary fiscal and monetary policy

18. Repo rate a forecast – not a promise Per cent, quarterly average Source: The Riksbank Diagram Note. Broken lines refer to the Riksbank’s forecasts