Text stringlengths 6 555 | Date stringclasses 43
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|---|---|---|---|---|---|---|---|
The high inflation is being felt by households with small margins in particular. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
But inflation is also problematic for the economy as a whole. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
Against this backdrop, it is extremely important that it falls back to 2 per cent within a reasonable period of time, so that confidence in the inflation target can be maintained. | 29/06/2023 | Jun-23 | par_body | null | null | null | hawkish |
And now there are several signs that developments are moving in the right direction. | 29/06/2023 | Jun-23 | par_body | null | null | null | positive |
Global market prices for commodities and energy have fallen substantially. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
Consumer prices for energy and food, which have earlier risen rapidly, are now falling and contributing to the slowdown in inflation. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
CPIF inflation continued to fall in April and May and is somewhat lower than expected. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
It now amounts to 6.7 per cent, according to the most recent outcome for the month of May. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
Underlying inflation, measured as the CPIF excluding energy, has also been slowing down for some time. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
But here the decline is slower. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
CPIF inflation excluding energy is now 8.2 per cent according to the most recent outcome for the month of May, which is marginally higher than the Riksbank's previous forecast. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
Although inflation is falling, it is still far too high, and the picture of how prices will develop going forward is not clear. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
Some indicators point to prices rising at a slower pace, for instance, prices at earlier stages of production and plans for price increases in the National Institute of Economic Research’s Economic Tendency Survey. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
On the other hand, the outcome for May showed that service prices are increasing faster than expected, which could reflect continued high demand pressures in parts of the Swedish economy. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
Although household consumption has fallen substantially recently, the demand for services has been maintained relatively well, which means that service prices are expected to continue to increase relatively rapidly for some time to come. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
In addition, the household sector as a whole has had access to large savings after the pandemic, which could be used for consumption (see also Chapter 3). | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
Services account for almost 50 per cent of the CPIF. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The continued rapid increase in service prices follows an international pattern and points to risks that inflation both in Sweden and abroad may linger at a high level (see figure 3). | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
The conditions for inflation to fall back are improved by inflation expectations having continued to fall (see figure 4). | 29/06/2023 | Jun-23 | par_body | null | null | null | positive |
The fact that long-term expectations have been close to the target despite inflation rising sharply is a sign of the strength of monetary policy. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The Industrial Agreement was clear confirmation that the social partners have considerable confidence in the inflation target. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
However, the settlement also includes a clear expectation that if necessary the Riksbank should continue to adjust monetary policy to bring down inflation within the fairly near future, so that real wages can begin to increase again. | 29/06/2023 | Jun-23 | par_body | null | null | null | hawkish |
The fact that the high inflation is a major socioeconomic problem has also made its mark on fiscal policy. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The Government has clearly communicated that the proposed reforms shall not hamper the Riksbank’s ambition to bring down inflation. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The Riksbank's forecast assumes that fiscal policy will not on the whole affect the prerequisites for bringing down inflation significantly. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
Monetary policy needs to be tightened further | 29/06/2023 | Jun-23 | sub_sec_title | null | 1.2 | null | hawkish |
Companies’ price plans dampening but at a slow pace | 29/06/2023 | Jun-23 | par_title | null | null | null | neutral |
Both the Tendency Survey of the National Institute of Economic Research and the Riksbank's Business Survey show that the price plans have been dampened, although this is mainly in the manufacturing sector. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
Among the companies in household-related sectors, price plans are still clearly elevated (see figure 5). | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
Depreciation of the krona counteracts downturn in inflation | 29/06/2023 | Jun-23 | par_title | null | null | null | negative |
Following the previous monetary policy decision, the krona exchange rate has reached the weakest levels since the financial crisis 2008–2009. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
The Riksbank has previously identified two main possible explanations for the weak krona. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
Firstly, financial turmoil tends to reduce demand for currencies in small open economies like Sweden. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
And secondly, interest rates over the past year have risen more abroad than in Sweden, which reduces the relative return on krona investments. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
A third factor highlighted by currency analysts is international investors’ unease regarding the interestrate sensitivity in the Swedish economy, linked to the problems in the real estate sector and the highly indebted households. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
Set against this are the fact that the
Swedish banks are profitable and well-capitalised and are well-placed to manage a worse situation. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
Nor have there been any significant fluctuations in financial prices recently that can be connected to risks in the Swedish banking system. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
Moreover,
Sweden has very strong public finances, which also reduces the risks in the economy as a whole. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The Riksbank’s forecast that the krona will strengthen going forward is based on an assessment of the real exchange rate’s long-term level (see further in
Chapter 3). | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The Riksbank's assessment is that the development of the krona is neither the main reason for the upturn in inflation last year, nor the factor that will determine whether inflation falls going forward. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
However, relationships based on data from when inflation was low may have led to the pass-through from changes in the krona exchange rate to inflation being underestimated. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The fact that companies have had a greater tendency to pass on their cost increases to consumer prices when inflation is high probably also applies to cost increases due to the weak krona causing import prices to rise | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The Riksbank's Business Survey also mentions the krona as an important factor behind planned price increases at consumer-related companies. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The fact that the krona has depreciated – and is expected to be weaker in the coming years, in relation to the assessment in April – contributes to raising the forecast for inflation and thereby also the need for monetary tightening. | 29/06/2023 | Jun-23 | par_body | null | null | null | hawkish |
But there is considerable uncertainty regarding both the future krona exchange rate and its pass-through to inflation. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
Section 1.4 describes a scenario where inflation is higher than expected, due to a combination of a weaker krona and a greater pass-through to inflation. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
It is also important to point out that Sweden has a floating exchange rate, combined with an inflation target. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The Riksbank therefore has no target for the Swedish krona exchange rate. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
Policy rate raised by 0.25 percentage points to 3.75 per cent | 29/06/2023 | Jun-23 | par_title | null | null | null | hawkish |
In April, the Riksbank communicated that the interest rate would probably be raised by 0.25 percentage points in June or September. | 29/06/2023 | Jun-23 | par_body | null | null | null | hawkish |
Despite inflation falling, it is still far too high. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
Underlying inflation measured as the CPIF excluding energy is declining at a slower pace than CPIF inflation, which is linked to the strong growth in service prices. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
To ensure that inflation continues downwards and stabilises around the target within a reasonable period of time, monetary policy needs to be tightened further. | 29/06/2023 | Jun-23 | par_body | null | null | null | hawkish |
The Executive Board has therefore decided to raise the policy rate by 0.25 percentage points to 3.75 per cent. | 29/06/2023 | Jun-23 | par_body | null | null | null | hawkish |
The forecast is that the policy rate will be raised at least one more time this year and after that will remain at a contractionary level for a relatively long period of time (see figure 6). | 29/06/2023 | Jun-23 | par_body | null | null | null | hawkish |
However, there is still considerable uncertainty regarding how much monetary policy tightening will be required for inflation to fall and stabilise close to the target of 2 per cent. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
But the Riksbank will do what is required. | 29/06/2023 | Jun-23 | par_body | null | null | null | hawkish |
New information and how it is assessed to affect the economic outlook and inflation prospects will be decisive in determining the monetary policy stance. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The Riksbank extends the sales of government bonds | 29/06/2023 | Jun-23 | par_title | null | null | null | hawkish |
In April, the Riksbank initiated sales of government bonds at a value of SEK 3.5 billion per month. | 29/06/2023 | Jun-23 | par_body | null | null | null | hawkish |
The sales have functioned well, with good demand from the market. | 29/06/2023 | Jun-23 | par_body | null | null | null | positive |
The Executive Board assesses that it is appropriate to increase the pace of the normalisation of the Riksbank's balance sheet somewhat, by extending the sales from SEK 3.5 to 5 billion per month with effect from September this year. | 29/06/2023 | Jun-23 | par_body | null | null | null | hawkish |
If the sales 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 7). | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The yields on Swedish government bonds are still unusually low in relation to the expected policy rate (see also Chapter 2). | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The Riksbank assesses that increased sales of government bonds will contribute to a slight rise in government bond yields, but that the pass-through to deposit and lending rates to households and non-financial companies will be limited. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The measure will also increase the amount of safe and easily marketable assets in the Swedish market. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
It may make it easier for foreign agents to invest in Swedish assets and also improve the functionality of the financial markets. | 29/06/2023 | Jun-23 | par_body | null | null | null | positive |
All in all, this can contribute to a stronger krona and improve the Riksbank’s capacity to reduce inflation. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The Riksbank is not planning to sell its holding of non-government bonds. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
If monetary policy needed to be tightened further, increases in the policy rate are the main and most effective tool. | 29/06/2023 | Jun-23 | par_body | null | null | null | hawkish |
Sales of government bonds should be characterised by predictability and contribute to a gradual normalisation of the Riksbank's balance sheet. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
Economic activity slowing down and inflation falling towards the target | 29/06/2023 | Jun-23 | par_title | null | null | null | negative |
Demand in the Swedish economy needs to dampen to enable inflation to fall back towards the target within a reasonable period of time. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
The policy rate is now at a level that is contractionary, which contributes to the expectation that GDP will fall somewhat going forward, while the employment rate declines (see figure 8). | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
Together with an expected strengthening of the krona in the coming years, this will help CPIF inflation to fall back and be close to the target in 2024. | 29/06/2023 | Jun-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 9). | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The forecasts are described in more detail in Chapter 3. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
Continued high uncertainty regarding the economic outlook | 29/06/2023 | Jun-23 | sub_sec_title | null | 1.3 | null | neutral |
There are several factors that make economic developments abroad and in Sweden uncertain. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
Ultimately, these factors can also affect Swedish inflation prospects and the Riksbank’s monetary policy. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
A significant economic effect of the war was a substantial rise in electricity and food prices last year. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
Global market prices for commodities and electricity prices have fallen back substantially recently, but developments in the coming years are still uncertain. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
There is also uncertainty regarding climate and weather with regard to food prices. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
Southern Sweden and parts of Europe are already experiencing droughts, which could cause food prices to rise faster again later this year. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
The international banking turmoil that arose in March has decreased further since the monetary policy meeting in April. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
Signs of a tightening of financial conditions have primarily been visible in the US economy, and the problems in foreign banks have had a relatively small impact on financial markets in Sweden. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
The focus in Sweden has instead been to a greater degree directed at the highly indebted commercial real estate sector. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
Some companies have recently encountered difficulties as a result of the rising interest rates. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
There are considerable differences between different real estate companies, however, and those with lower leverage are better equipped to deal with higher interest rates. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
Moreover, the banks are well placed to continue ending to robust companies, and many real estate companies are now taking measures to reduce indebtedness. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
But in a bad scenario, the problems in the highly indebted commercial real estate companies can lead to more serious negative consequences for financial stability and thereby also for developments in the real economy. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
The Riksbank has for a long time been pointing out that Swedish households have become more sensitive to interest rates than before. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
This is due to their increased indebtedness and the short interest-rate fixation periods on their mortgages.12 But despite the short interest-rate fixation periods, the policy rate hikes implemented so far have not fully impacted all households with mortgages (see a more detailed description in Chapter 2). | 29/06/2023 | Jun-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. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
The household sector as a whole built up large savings during the pandemic that have been used to sustain consumption. | 29/06/2023 | Jun-23 | par_body | null | null | null | positive |
But as there is no up-to-date microdata on how households’ savings are distributed, it is difficult to assess how households will adapt their consumption to the rising interest rates. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
One factor that could lead to unexpectedly high demand is the stronger-than-expected development of the Swedish labour market over the past year. | 29/06/2023 | Jun-23 | par_body | null | null | null | neutral |
If this development continues and the employment rate is maintained, it could lead to disposable incomes, and therefore also demand, probably being higher than in the Riksbank’s forecast. | 29/06/2023 | Jun-23 | par_body | null | null | null | positive |
One sector of the Swedish economy that has already been affected fairly substantially by the Riksbank’s policy rate hikes is the housing market. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
Housing prices have fallen by almost 15 per cent from the peak at the beginning of 2022. | 29/06/2023 | Jun-23 | par_body | null | null | null | negative |
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