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