Minutes of the Executive Board’s monetary policy meeting on 21 October 2009
The recovery has begun, but it will take time. To contribute to a stable recovery and attain the inflation target of 2 per cent, the Executive Board of the Riksbank decided at the monetary policy meeting held on 21 October to hold the repo rate unchanged at 0.25 per cent. The forecast for the repo rate was also held unchanged, and the repo rate was expected to remain at this low level until autumn 2010. The Executive Board of the Riksbank also decided to offer further loans totalling SEK 100 billion to the banks at a fixed interest rate and with a maturity of 11 months.
Deputy Governor Lars E.O. Svensson entered a reservation against the decision and advocated cutting the repo rate to 0 per cent and a repo rate path that meant the repo rate would be kept at this level until the end of the third quarter of 2010. According to Mr Svensson such a repo rate path entails a better-balanced monetary policy, with lower unemployment, higher resource utilisation and a CPIF inflation rate closer to the target, without causing any problems to the functioning of the financial markets or to financial stability.
Deputy Governors Lars Nyberg and Barbro Wickman-Parak supported the decision to hold the repo rate unchanged at 0.25 per cent, but entered reservations against the growth forecasts in the Monetary Policy Report and thereby the repo rate path. They motivated their stance by stating, for instance, a more positive view of how developments in the financial markets could affect economic activity both in Sweden and abroad. This would mean that the interest rate needed to be raised slightly earlier than is forecast in the Monetary Policy Report. Nor did they consider that the economy needed to be stimulated by further loans to the banks at a fixed interest rate.
First Deputy Governor Svante Öberg entered a reservation against a further fixed-interest rate loan, given the improved situation in the financial markets and the time to maturity of the loan, but he supported the decision to hold the repo rate and the repo rate path unchanged.
You can read the full minutes of the monetary policy meeting held on 21 October in the attached PDF file.
