Minutes of Monetary Policy Meeting held on 2 September 2015
At the Monetary Policy Meeting on 2 September, the Executive Board of the Riksbank decided to leave the repo rate unchanged at –0.35 per cent. The expansionary monetary policy, with a negative interest rate and the previous decision to purchase government bonds until the end of the year, is supporting the continued positive development of the Swedish economy so that CPIF inflation can be expected to be close to 2 per cent in 2016. The Riksbank remains highly prepared to make monetary policy even more expansionary in the event of the inflation outlook deteriorating.
It was noted at the meeting that the Executive Board agreed on the description of economic prospects and the inflation outlook in the draft Monetary Policy Report.
The expansionary monetary policy in Sweden has contributed towards economic activity strengthening, the labour market situation improving and there being a clear upward trend in inflation since last autumn.
The recovery is continuing abroad. But developments there are still surrounded by great uncertainty due to the fall in the price of oil and large fluctuations on the stock and foreign exchange markets.
Lower energy prices due to the fall in oil prices have led to a downward revision to CPIF inflation in the period ahead but, nevertheless, inflation is expected to rise clearly and the forecast for the CPIF excluding energy remains basically unchanged since the assessment made in July.
All in all, developments in Sweden and abroad have been in line with the assessment in July and the revisions to the forecast are small.
The Executive Board therefore unanimously decided to leave the repo rate unchanged at –0.35 per cent and to continue to purchase government bonds until the end of the year according to the plan determined by the Executive Board in July.
Given the uncertainty surrounding international developments, the Executive Board also agreed unanimously that the Riksbank needs to maintain a high level of preparedness to make monetary policy even more expansionary, even between ordinary monetary policy meetings, should the inflation outlook deteriorate.
By pursuing a continued highly expansionary monetary policy, the Riksbank is supporting the positive development of the Swedish economy so that CPIF inflation can be expected to be close to 2 per cent next year.
The meeting also discussed developments in China and other emerging market economies and the risk that the volatile oil price will influence the inflation assessment. It was noted in various ways that the development of the Swedish krona will continue to be important. Several members of the Executive Board also discussed how much scope there is for making monetary policy more expansionary. Finally, several members of the Executive Board emphasised that there is a great need to manage mandates and tools within the area of macroprudential policy promptly.