The Riksbanks monetary policy 26 November 2020 Increased spread of - PowerPoint PPT Presentation

The Riksbank’s monetary policy 26 November 2020

Increased spread of infection – new downturn in the economy Zero interest rate and extended purchases of securities provide support in an uncertain time

Increased spread of infection and new restrictions 25 25 Europe, share of positive test Sweden, share of positive tests 20 20 15 15 10 10 5 5 0 0 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Source: ECDC Percentage of those tested. Weekly data until 15 November.

Already vulnerable sectors further impacted 20% 20% Daily turnover Moving average (7 days) 0% 0% -20% -20% -40% -40% -60% -60% -80% -80% Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Percentage change in turnover on a daily level, compared with 2019, in a sample Source: Caspeco.se of around 600 restaurants with an average turnover of SEK 18 billion.

Vulnerable groups have been impacted particularly severely on the labour market 15 15 10 10 5 5 0 0 -5 -5 -10 -10 -15 -15 Quarter 2: Other services -20.6 % -20 -20 Hotel and restaurant Total employment -25 -25 10 12 14 16 18 20 Number of employed, annual percentage change, calendar-adjusted Source: Statistics Sweden data

New downturn in Swedish economy • Six months of weak growth • Households and companies are better prepared, however • Small movements on the financial markets so far • Support measures from governments and central banks in place • Once restrictions are lifted, the recovery may be rapid But there is considerable uncertainty

Long and uncertain way back Index, 2019 Q4 = 100, seasonally adjusted data Sources: Statistics Sweden and the Riksbank

Extensive monetary policy support for as long as necessary Extending and increasing asset purchases Up to SEK 700 billion over the full year 2021 Zero repo rate over next few years

Substantial support from world’s central banks 60 60 The ECB The Federal Reserve 50 The Riksbank 40 40 30 20 20 10 0 0 13 14 15 16 17 18 19 20 Central banks’ balance sheet totals, percentage of GDP Source: Macrobond

Low interest rates to households and companies – supporting the recovery and inflation Per cent Sources: Statistics Sweden and the Riksbank

A combination of monetary and fiscal policy is making support measures more effective The Riksbank’s measures effective in keeping interest rates low Fiscal policy more effective support for adversely affected sectors Extensive economic policy support required for a long time

Volatile but gradually rising inflation Per cent Sources: Statistics Sweden and the Riksbank

Increased spread of infection – new downturn in the economy Zero interest rate and extended purchases of securities provide support in an uncertain time