From crisis management to recovery the Cecilia Skingsley - PowerPoint PPT Presentation

From crisis management to recovery – the Cecilia Skingsley Riksbank's role in First Deputy Governor the next phase of the crisis DI Konferens (3 September 2020)

Heavy fall in Swedish GDP growth Note: Annual percentage change. Forecast from the Monetary Policy Sources: Statistics Sweden and the Riksbank. Report July 2020.

Extensive measures to hold down interest rates and facilitate credit supply Loans to the banks for Purchases of government, Increased access Loans in onward lending mortgage and municipal bonds to safe and liquid US to companies as well as commercial paper Assets dollars 500 billion 500 billion Unlimited USD 60 billion Utilised: Utilised: Utilised: Utilised: 165 billion 179 billion 29 billion 2 billion

The Riksbank's measures support the recovery and inflation Market rates have come down Credit supply has been maintained Note: Yields on 5-year bonds, per cent, and annual growth rate Sources: Macrobond, Statistics Sweden and the Riksbank respectively. The vertical lines show the Riksbank's extraordinary meeting to deal with the pandemic on 11 March.

Major economic consequences of the pandemic Industrial production 110 110 100 100 90 90 80 80 United States Euro area Sweden 70 70 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Note: Index December 2019 = 100. Sources: Eurostat, Federal Reserve and Statistics Sweden

Rapidly rising unemployment July: 9.3 % Note: Per cent of labour force aged 16-64. Source: Arbetsförmedlingen (Swedish public employment service)

Low inflation now – expected to rise Note: Forecast from the Monetary Policy Report in July 2020, the Sources: Statistics Sweden and the Riksbank. points indicate the outcomes after the Monetary Policy Report was published. Annual percentage change.

International developments: Inflation also below 2 per cent target in many other countries 3.5 3.5 3 3 2.5 2.5 2 2 1.5 1.5 1 1 0.5 0.5 0 0 10 12 14 16 18 20 22 UK, CPI USA, CPI Euro area, HICP Sweden, CPIF Note: Inflation refers to the CPI, the CPIF and the HICP. Annual data. Sources: The Bank of England, the ECB, the Federal Reserve and the Riksbank

Central banks’ policy rates are at or close to the lower bound Sources: National central banks and the Riksbank.

The pandemic changes the playing field • Large number of countries and central banks in the same boat – low inflation, policy rate at or close to lower bound • The core question: “How to ensure that monetary policy has the scope to counteract recessions in the future?” • The US central bank is adjusting its goals and strategy. An adaptation to a world with lasting low interest rates