Account of monetary policy 2012
Date
27/03/2013
Every year, the Riksdag Committee on Finance examines and assesses the monetary policy conducted by the Riksbank during the immediately preceding years. Prior to the assessment made during the spring, the Riksbank compiles a written account, an Account of monetary policy (previously known as Material for assessing monetary policy).
Poorer economic prospects led to lower inflation
The weak developments in the euro area had a clearly negative impact on the Swedish economy during 2012. Demand in Sweden slowed down and inflationary pressures were lower, which made it more difficult for companies to raise their prices. In recent years the krona has strengthened, approaching more long-run normal levels. This has also contributed to low inflationary pressures.
Inflation undershot the target in 2012
Both CPI and CPIF inflation that is the CPI with a fixed mortgage rate, were on average around 1 per cent in 2012. The fact that inflation was below the Riksbank's target of 2 per cent was largely due to economic activity abroad being much weaker than expected and the effects this had on the Swedish economy. At the same time, long-run inflation expectations were close to 2 per cent, which shows that the public was still confident that the Riksbank would attain its inflation target.
Low repo rate to attain the inflation target
In 2012 the Executive Board of the Riksbank cut the repo rate from 1.75 to 1 per cent to support economic activity and bring inflation back on target. The forecasts for the repo rate, known as the repo-rate path, were also lowered over the course of the year. The members of the Executive Board were unanimous that the repo rate needed to be cut gradually, but there were differing opinions as to how much it should be cut.
Read more in the report Account of monetary policy 2012 (previously Material for assessing monetary policy.)
