1. Monetary policy meeting September 2007

2. Swedish economy developing strongly Cost pressures increasing Financial unrest creates uncertainty View of future repo rate remains largely unchanged since June

3. Repo rate is raised by 0.25 percentage points to 3.75 per cent Interest rate needs to be raised over the coming years to attain the inflation target of 2 per cent

4. Inflation on target one year ahead Annual percentage change Note. The broken line refers to the Riksbank’s forecast in the MPR 2007:2. Sources: Statistics Sweden and the Riksbank CP I

5. New data since June Slightly stronger labour market Low growth in productivity Rising food prices Rising inflation expectations

6. Unemployment Percentage of labour force, seasonally-adjusted data Sources: Statistics Sweden and the Riksbank Note. The broken line refers to the Riksbank’s forecast in the MPR 2007:2. Open unemployment Total unemployment

7. Productivity growth Annual percentage change Sources: Statistics Sweden and the Riksbank Note. The broken line refers to the Riksbank’s forecast in the MPR 2007:2.

8. Food prices in different channels Annual percentage change Sources: The Economist, Statistics Sweden and the Riksbank Food prices in CPI (right scale) The Economist commodity index -foods (left scale)

9. CPI and inflation expectations Annual percentage change Sources: NIER, Statistics Sweden and the Riksbank CPI Households, NIER Companies, NIER Note. The broken line refers to the Riksbank’s forecast in the MPR 2007:2.

10. Unrest in the financial markets Problems in the US sub-prime market Increased uncertainty and reduced willingness to take risks Disruptions in the interbank market Less effect in Sweden

11. Consequences Higher credit spreads/increased loan costs Falling stock market prices Weaker growth Reduced willingness to invest Increased precautionary savings

12. US certificates and treasury bills 30 day duration, per cent Sources: Bloomberg and the Federal Reserve Board

13. Risks Higher cost pressures Financial unrest

14. Summary Swedish economy is developing strongly Cost pressures are rising Interest rate needs to be raised over coming years to attain inflation target of 2 per cent. The view of the future repo rate remains unchanged since June Interest rate path is a forecast, not a promise

15. Better communication Six monetary policy meetings a year Interest rate path published after each meeting Three monetary policy reports Three updated forecasts for a small number of variables Applies with effect from December