Hearing on monetary policy Martin Flodn Deputy Governor Riksdag - - PowerPoint PPT Presentation
Hearing on monetary policy Martin Flodn Deputy Governor Riksdag Committee on Finance 8 November 2018 Is it time to raise the interest rate? Inflation too low for a long time Weakened confidence in the inflation target
→Weakened confidence in the inflation target →Price-setting and wage formation affected →Not obvious that inflation will return to target
→Interest rate close to lower bound
Inflation close to target Confidence in the inflation target is stronger
Annual percentage change. Inflation expectations refer to average for money market participants. Vertical broken line indicates when a negative repo rate was introduced and government bond purchases were initiated.
Sources: Statistics Sweden and TNS Sifo Prospera
0.0 0.5 1.0 1.5 2.0 2.5 3.0
0.0 0.5 1.0 1.5 2.0 2.5 3.0 10 12 14 16 18 20 CPIF 1.0 1.5 2.0 2.5 3.0 1.0 1.5 2.0 2.5 3.0 10 12 14 16 18 20 5 years ahead 2 years ahead Inflation expectations
→Weakened confidence in the inflation target →Price-setting and wage formation affected →Not obvious that inflation will return to target
→Interest rate close to lower bound