Monetary policy decision September 2018 If the economy develops as - - PowerPoint PPT Presentation

Monetary policy decision

September 2018

If the economy develops as expected, there will soon be scope to slowly reduce the support from monetary policy

Good Swedish economic activity

Growth higher than historical average Unemployment has fallen

Annual percentage change and per cent of labour force, respectively. Source: Statistics Sweden

Inflation on target

Annual percentage change. Source: Statistics Sweden

• 1

1 2 3

• 1

1 2 3 11 13 15 17 CPIF

Inflation on target – energy prices providing a boost

Annual percentage change and percentage points, respectively. Sources: Statistics Sweden and the Riksbank

• 1

1 2 3

• 1

1 2 3 11 13 15 17 Energy prices’ contribution to the CPIF CPIF

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1 2 3

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1 2 3 11 13 15 17 19 21 Energy prices’ contribution to the CPIF CPIF

Inflation to fall back when energy prices slow down

Annual percentage change and percentage points, respectively. The contribution of energy prices to the CPIF in the forecast is calculated as the annual percentage change in energy prices multiplied by its current weight.

Sources: Statistics Sweden and the Riksbank

Contribution from energy prices set to decrease

Moderate inflationary pressures

Annual percentage change. The field shows the highest and lowest

• utcome for different measures of underlying inflation

Sources: Statistics Sweden and the Riksbank

• 1

1 2 3 4 5

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1 2 3 4 5 01 04 07 10 13 16 CPIF, July outcome

Swedish economic activity still strong

Slightly slower growth but continued high pressure on the labour market

Annual percentage change and per cent of population, 15-74 years, respectively. Sources: Statistics Sweden and the Riksbank

Good global growth

Favourable economic activity abroad Slowly rising inflationary pressures Expansionary monetary policy But trade conflicts and economic policy problems creating uncertainty

The krona has weakened

Index, 18 November 1992 = 100. Outcomes are daily data and forecasts refer to quarterly averages. The KIX is an aggregate of exchange rates in countries important for Sweden's international transactions.

Sources: National sources and the Riksbank

Weaker krona Stronger krona

Monetary policy needs to proceed cautiously

Temporary factors keeping up inflation, inflationary pressures remain moderate Too early to increase the interest rate now Good prospects for rising inflationary pressures If economy develops as expected, soon scope to slowly reduce support Need to be vigilant about inflationary pressures

Continued expansionary monetary policy

Repo rate -0,50 per cent Government bond purchases

Per cent and nominal amount, SEK billion. The development of reinvestments from mid-2018 onwards is a forecast and refers to nominal

• amounts. The final amounts will depend on current market prices.

Source: The Riksbank 10 20 30 40 50 60 70 80 10 20 30 40 50 60 70 80 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019

Reinvestments of coupons Reinvestment of principal payments New purchases

If the economy develops as expected, there will soon be scope to slowly reduce the support from monetary policy