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Sveriges Riksbank: Minutes of the monetary policy meeting held on 8 April

At the monetary policy meeting on 8 April, the Executive Board of the
Riksbank decided to hold the repo rate unchanged at 0.75 per cent and
to adjust the repo-rate path downwards.

It was noted at the meeting that the Executive Board largely agreed on
the picture of economic prospects and the inflation outlook described
in the draft Monetary Policy Update.

Economic developments abroad continue to improve, well in line with
the Riksbank's earlier assessments. In Sweden, GDP growth was higher
than expected in the fourth quarter of last year. This was partly due
to temporary factors, but the broad upturn in demand implies that an
economic upturn has begun. The prospects for the Swedish economy
remain bright and a clear improvement in the labour market is
expected during the second half of this year.

Economic activity is strengthening and household indebtedness as a
share of disposable income is expected to increase more than was
previously forecast. Inflation has been somewhat lower than expected,
but only a minor revision has been made to the inflation forecast.
CPIF inflation is expected to rise towards the end of the year and to
be close to 2 per cent during the latter part of 2015.

Given that economic activity has strengthened and that the revisions
to the inflation forecast are minor, a majority of four Board members
considered it appropriate to hold the repo rate unchanged at the
current low level of 0.75 per cent. They also assessed that it is
appropriate to wait around one year before beginning to raise the
repo rate, when inflation picks up.

Given the low rate of inflation, a majority of Board members also
considered it appropriate to adjust the repo-rate path downwards so
that it reflects a greater probability of a repo-rate cut in the near
term compared with the assessment made in February.

Two members advocated cutting the repo rate to 0.50 per cent, as
inflation has been lower than expected over a long period of time and
to ensure that inflation rises towards the target. They both
advocated a first repo-rate increase roughly in line with the
forecast in the draft Monetary Policy Update, but had slightly
differing views on the repo-rate path after this. One member
considered it appropriate that at the end of the forecast horizon,
the repo rate should coincide with the rate in the draft Monetary
Policy Update, while the other member preferred a lower repo-rate

The members discussed the low inflation rate and some of them pointed
out that now even minor revisions to the inflation forecast could
affect their view of monetary policy. They also discussed the
repo-rate path slightly further ahead, the long-run level for the
repo rate and the significance of the exchange rate for the
development of inflation. The need to implement macroprudential
policy measures was emphasised, as were other measures that affect
household demand for loans and the functioning of the housing market.
There was also a discussion of to what extent household debt should
influence monetary policy. Moreover, there was discussion of global
risks to economic developments and potential consequences for
developments in Sweden.

Press office tel. 46 8 787 0200


Författare Hugin

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