Monetary policy decision December 2019
From strong to more normal economic activity Inflation on target
Monetary policy needs to proceed cautiously 3 3 December 2019 Long period of too low inflation December 2018 2 2 Important to anchor inflation at target level 1 1 Gradual adjustment of monetary policy to calmer economic activity 0 0 -1 -1 11 13 15 17 19 21 Per cent Source: The Riksbank
Global economic activity as expected in a calmer phase Confidence stronger in service sector than manufacturing industry Strong labour market 14 14 Unemployment, United States 12 12 Unemployment, Euro area 10 10 8 8 6 6 4 4 2 2 0 0 05 07 09 11 13 15 17 19 Purchasing Managers’ Index in the euro area and per cent of labour Sources: Markit Economics and the OECD force respectively.
International growth nevertheless good Index, 2007 Q1 = 100 Sources: Bureau of Economic Analysis, Eurostat, Statistics Sweden and the Riksbank
Major Swedish companies on economic situation Construction Manufacturing Retail industry “So far, we don’t expect any “It is not bad but not the same “More difficult than ever before to sharp economic downturn” frantic pressure as before” judge where things are heading”. Quotes from the Riksbank’s Business survey, November 2019
From high to more normal economic activity High employment rate Calmer growth Annual percentage change and percentage of the population, 15–74 Sources: Statistics Sweden and the Riksbank years, seasonally-adjusted data.
Inflation forecast still holds Annual percentage change Sources: Statistics Sweden and the Riksbank
Repo rate raised but monetary policy provides continued support 3 3 Repo rate 2 2 1 1 0 0 -1 -1 11 13 15 17 19 21 Per cent Source: The Riksbank
Negative repo rate has worked well Had the expected impact Contributed to strong economic activity and inflation close to target Effects if this is perceived as more permanent? In a world with low interest rates, the repo rate may periodically need to be negative
From strong to more normal economic activity Inflation on target
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