Text stringlengths 6 555 | Date stringclasses 43
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|---|---|---|---|---|---|---|---|
Policy rate raised by 0.25 percentage points to 4 per cent | 21/09/2023 | Sep-23 | par_title | null | null | null | hawkish |
The tighter monetary policy has contributed to inflation now beginning to fall. | 21/09/2023 | Sep-23 | par_body | null | null | null | positive |
But despite falling now, inflation is still far above the target of 2 per cent. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
Moreover, underlying inflation measured as the CPIF excluding energy is declining at a slower pace than CPIF inflation, which is linked to the fall in energy prices. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
The high inflation is problematic for the economy as a whole and is being felt by households with small margins in particular. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
The development of inflation is going in the right direction. | 21/09/2023 | Sep-23 | par_body | null | null | null | positive |
But the rapidly rising service prices and the weak krona are helping to sustain inflation and increase the risk that it will not continue falling and approach the target sufficiently quickly. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
To ensure that inflation continues downwards and stabilises around the target within a reasonable period of time, monetary policy needs to be tightened somewhat further. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
The Executive Board has therefore decided to raise the policy rate by 0.25 percentage points to 4 per cent. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
The decision is in line with the assessment in the monetary policy decision in June, which indicated that the policy rate would probably be raised at least one more time this year. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
The higher policy rate is expected to lead to economic activity being somewhat lower in the short run and to development in the labour market slowing down compared with if the policy rate were held unchanged. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
However, the Riksbank assesses that the monetary policy tightening is necessary to bring down inflation and thus contribute to good economic development in the near term. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
If inflation becomes more persistently high, the negative consequences for Swedish growth and the labour market will be much greater. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
This is illustrated in a scenario in Section 1.4. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
The forecast for the policy rate indicates that it can be raised further (see Figure 7). | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
Monetary policy needs to be contractionary for a longer period of time for inflation to fall back and stabilise close to the target of 2 per cent. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
New information and how it is expected to affect the prospects for the economy and inflation will be decisive in determining the monetary policy stance. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
Sales of government bonds continuing according to plan | 21/09/2023 | Sep-23 | par_title | null | null | null | hawkish |
In April, the Riksbank began to sell government bonds. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
As the sales had worked well and had the desired effect, the Executive Board decided in June that it was appropriate to increase the pace of the normalisation of the Riksbank's balance sheet by expanding the sales. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
By making it easier for foreign agents to invest in Swedish assets and improve the functioning of the financial markets, the sales can, all else being equal, help to strengthen the krona and improve the Riksbank’s capacity to reduce inflation. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
The normalisation of the balance sheet should occur gradually and be characterized by predictability. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
The Riksbank is not planning to sell its holdings of non-government bonds. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
If monetary policy were to need tightening further, policy rate hikes are the main and most effective tool. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
If the sales of government bonds continue at the pace now decided, and other bonds are kept until maturity, the asset holdings will amount to just below SEK 150 billion at the end of the forecast period (see Figure 8). | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
Inflation will fall towards the target when demand cools | 21/09/2023 | Sep-23 | par_title | null | null | null | positive |
The policy rate is at a contractionary level, which is helping to dampen demand in the economy. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
This is necessary for inflation to fall back towards the target within a reasonable period of time. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
The Riksbank's forecast indicates that GDP is expected to fall somewhat going forward, at the same time as development in the labour market is slowing down further (see Figure 9). | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
Together with an expected moderate strengthening of the krona in the coming years, this will help to reduce inflation. | 21/09/2023 | Sep-23 | par_body | null | null | null | positive |
As energy prices are expected to fall rapidly, CPIF inflation is projected to be close to the target in 2024. | 21/09/2023 | Sep-23 | par_body | null | null | null | positive |
It will take a little longer for inflation measured as the CPIF excluding energy to come close to 2 per cent (see Figure 10). | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
The forecasts are described in more detail in Chapter 3. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
Economic prospects remain very uncertain | 21/09/2023 | Sep-23 | sub_sec_title | null | 1.3 | null | negative |
Several factors make economic developments abroad and in Sweden uncertain. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
Ultimately, these factors can also affect Swedish inflation prospects and the Riksbank’s monetary policy. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
However, since the economy reopened earlier this year, development has been much weaker than expected, partly due to the declining real estate market. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
As Sweden has extensive trade with Germany, a severe slowdown there would in turn have a negative effect on Swedish growth. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
The Swedish real economy could be negatively impacted by the highly leveraged commercial real estate sector. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
Some companies are already facing problems, now that interest rates have risen. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
However, there are major differences between different real estate companies, and those with stronger balance sheets are better equipped to deal with higher interest rates. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
Moreover, the banks are well placed to continue lending to robust companies, and many real estate companies are now trying to reduce their indebtedness. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
But the problems in the highly indebted companies nevertheless pose a risk to the Swedish economy. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
The forecast for household consumption in Sweden is very uncertain, with risks on both the upside and the downside. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
Swedish households’ sensitivity to interest rates is high, both from an historical perspective and from an international perspective. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
There is a risk that household demand will slow down more than expected when the interest hikes take full effect. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
Households in general built up large savings during the pandemic, however, and estimates imply that they have considerable savings capital left (see the article “Household savings increased significantly during the pandemic”). | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
If they were to choose to use more of their savings for consumption going forward, demand could become stronger than the Riksbank is forecasting. | 21/09/2023 | Sep-23 | par_body | null | null | null | positive |
But partly because there is no up-to-date microdata on how savings are allocated among households, it is difficult to assess how they will act. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
A further factor that could lead to an unexpectedly high consumption demand is the stronger-than-expected development of the Swedish labour market over the past year. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
If this development continues, disposable income, and therefore also demand, would probably become higher than in the Riksbank’s forecast. | 21/09/2023 | Sep-23 | par_body | null | null | null | positive |
The housing market is also creating uncertainty in the Swedish economy. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
Last year, prices fell rapidly. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
But this year, prices have been stable and even risen somewhat, despite mortgage rates being raised further. | 21/09/2023 | Sep-23 | par_body | null | null | null | positive |
At the same time, turnover is unusually low, which makes the future development difficult to predict. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
The Riksbank's forecast is that prices will fall somewhat during the autumn, and then gradually begin to rise again. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
If prices instead continue along this year's trend, housing prices could become higher than in the forecast. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
This would mean that household consumption in particular could develop more strongly than expected, and perhaps also housing investment. | 21/09/2023 | Sep-23 | par_body | null | null | null | positive |
But there is also a risk that prices will fall even further than is now being assumed, when homes need to be sold at lower prices. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
The effect on demand and inflation would then be the reverse. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
Alternative scenarios for inflation and monetary policy | 21/09/2023 | Sep-23 | sub_sec_title | null | 1.4 | null | neutral |
The risks described above can affect inflation prospects and monetary policy in Sweden, so that the policy rate is different from in the main scenario (the forecast). | 21/09/2023 | Sep-23 | par_body | null | null | null | dovish |
In the scenarios described here, we will take a closer look at how such risks could lead to a different development in inflation and monetary policy than in the forecast. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
We therefore describe in this section two scenarios for inflation: one where inflation is higher than expected, and one where inflation falls faster than in the main scenario. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
The first scenario, where inflation is higher than forecast, is based on renewed supply disturbances in the global economy. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
As described in Section 1.3, such disturbances can occur as a consequence of both increased geopolitical unease and of climate- and weather-related problems and can, for example, lead to higher prices for energy and food in the world market. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
It is assumed in the scenario that the real economic development will be weaker than forecast, at the same time as inflation will be higher. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
This is the normal pattern following supply disturbances, when GDP and prices develop in opposite directions. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
In the second scenario, demand is assumed to be weaker than expected. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
As described in Section 1.3, this could occur for several different reasons, both due to international developments and factors related to domestic demand. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
In this type of scenario, inflation will become lower than forecast, at the same time as the real economy shows weaker development than expected. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
New supply shocks push up inflation and motivate tighter monetary policy, despite poorer real economic developments | 21/09/2023 | Sep-23 | par_title | null | null | null | negative |
In the first scenario, it is assumed that supply shocks will lead to direct effects on energy and food prices. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
But it is also assumed that indirect effects and secondary effects will occur. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
This is in line with research that indicates that households’ inflation expectations are very much affected by energy and food prices in particular. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
In earlier scenarios with an unexpectedly high inflation rate, two monetary policy alternatives have been shown: initially the same monetary policy as in the main scenario and then a monetary policy reaction that tries to tame the higher inflation. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
One difference now is that we will start by looking at the development when monetary policy reacts and tries to tame higher inflation. | 21/09/2023 | Sep-23 | par_body | null | null | null | None |
After that, we will look at a development where monetary policy initially does not react, but is gradually forced to do so, as inflation would otherwise become entrenched at a level above the target for a longer period of time. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
The higher inflation in the scenario is illustrated by the light blue line in the left-hand image in Figure 11. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
In this scenario, growth would be weaker than in the forecast, which is shown by the light blue line in Figure 12. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
In theory, this would mean that one has to decide between stabilising the real economy and reducing inflation. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
But in the present situation when inflation is far too high, the focus is on bringing down inflation. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
It is therefore assumed in the scenario that the policy rate will be raised to a level between 0.5 and 1 percentage points over the forecast in the main scenario, which is shown in the light blue line in the right hand image in Figure 11. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
The policy rate would begin to be raised more than in the main scenario relatively instantly, to prevent inflation from becoming entrenched in a situation where it is already too high. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
Such a monetary policy would contribute to inflation stabilising around the target within a two-year period. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
We will now look at an alternative where monetary policy at first does not react to the unexpectedly high inflation. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
This alternative is illustrated by the red lines in the images in Figure 11 and Figure 12. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
Despite inflation being higher than expected, the Riksbank initially follows the earlier plan and holds the policy rate at a level around 4 per cent. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
One might ask why monetary policy would be conducted in this way. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
Some reasons could be that greater weight is attached to stabilising the real economy, in a situation where economic activity has already weakened, or that the breadth of the upturn in inflation is underestimated. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
However, it is assumed in the scenario that the lack of monetary policy reaction leads to inflation expectations rising, which poses the risk of inflation not stabilising around the target even in the long run. | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
The policy rate is therefore raised gradually when
these problems become clear. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
But to stabilise inflation around the target within the forecast period, the policy rate would need to be raised much more than if the reaction had come earlier. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
As shown in Figure 12, the real economy could in the shortterm develop more strongly if monetary policy does not react, but in the longer run the development will be worse. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
This is connected to the large interest rate increases that would be needed to restore confidence in the inflation target once inflation expectations have begun to drift upwards. | 21/09/2023 | Sep-23 | par_body | null | null | null | hawkish |
Lower demand reduces both growth and inflation, but there can nevertheless be reasons to wait a bit before making rate cuts | 21/09/2023 | Sep-23 | par_title | null | null | null | neutral |
Demand can be weaker than in the Riksbank's forecast for many reasons, which can stem from both global and domestic factors. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
For instance, developments in China and Germany may become weaker and affect demand in the global economy negatively, or Swedish households may reduce their consumption more than expected in Sweden (see Section 1.2). | 21/09/2023 | Sep-23 | par_body | null | null | null | negative |
When demand falls, the possibility for companies to pass on cost increases to consumer prices declines. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
Inflation will then be lower than in the main scenario, which is illustrated by the light blue and red lines in the left hand image in Figure 13. | 21/09/2023 | Sep-23 | par_body | null | null | null | neutral |
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