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This time, the monetary policy discussion has primarily focused on whether purchases of securities should expire at the end of June 2016 or whether they should continue. | neutral |
In a scenario in which the economies of Sweden’s neighbours are growing significantly more slowly than expected, demand for Swedish exports may be dampened considerably, and confidence among Swedish companies and households may deteriorate. | negative |
In June this year the second phase of social security contribution increases for people under the age of 26 will be implemented. | neutral |
Moreover, a special wage tax was introduced in January for people over the age of 65. | neutral |
Economic activity in Sweden continues to improve in line with the forecast in December. | positive |
Weak developments abroad are slowing down growth, but are counteracted somewhat by the fall in the oil price and a weaker krona. | neutral |
Following a slowdown at the end of last year, the labour market is expected to strengthen. | positive |
In order to support the upturn in underlying inflation so that CPIF inflation approaches 2 per cent and to ensure that long-term inflation expectations are compatible with the inflation target, a more expansionary monetary policy is needed. | dovish |
The Executive Board of the Riksbank has therefore decided to cut the repo rate by 0.1 percentage points to −0.10 and to restore the interest rates for fine-tuning transactions to the repo rate +/− 0.1 percentage points. | dovish |
In addition, the repo-rate path has been adjusted downwards somewhat. | dovish |
The Executive Board has also decided to purchase government bonds to an amount of SEK 10 billion. | dovish |
If this proves insufficient to get inflation to rise towards the target, the Riksbank can quickly make monetary policy even more expansionary. | dovish |
The measures taken and the readiness to do more underline the Riksbank's aim to safeguard the role of the inflation target as a nominal anchor for price setting and wage formation. | neutral |
CHAPTER 3 – The current economic situation | neutral |
The Riksbank's monetary policy decisions in February and March have comprised repo-rate cuts, government bond purchases and the communication that further monetary policy measures will be taken if necessary. | dovish |
This has led to relatively strong reactions on the interest-rate and foreign exchange markets. | neutral |
CHAPTER 2 – Financial conditions | neutral |
Uncertainty surrounding the inflation forecast | neutral |
Tighter monetary policy for low and stable inflation | hawkish |
Swedish inflation is very high. | negative |
CPIF inflation rose to just over 10 per cent in December. | negative |
Even disregarding the rapidly increasing energy prices, inflation was high and still rising. | negative |
Other underlying measures of inflation have also continued to rise. | negative |
It is important for confidence in the inflation target that inflation falls back clearly this year and there are many indications that it will do so. | positive |
However, it is uncertain whether inflation will fall sufficiently quickly and far enough, not least given the fact that underlying inflation is still rising. | negative |
Moreover, if the krona continues to be weak, it will be considerably more difficult for the Riksbank to return inflation to the target more permanently. | neutral |
To bring down inflation and safeguard the inflation target, the Executive Board assesses that monetary policy needs to be tightened further. | hawkish |
The Executive Board has therefore decided to raise the Riksbank’s policy rate by 0.5 percentage points to 3.0 per cent. | hawkish |
The forecast for the policy rate indicates that it will probably be raised further during the spring. | hawkish |
As complementary measures to the higher policy rate, the Executive Board has also decided to reduce the Riksbank's asset holdings at a more rapid pace, by selling government bonds and offering larger volumes of Riksbank Certificates in the weekly monetary policy operations. | hawkish |
Tightening monetary policy more now reduces the risk of even more serious problems with inflation and greater monetary policy tightening further ahead, which would have comprehensive negative consequences for the Swedish economy. | neutral |
Tighter monetary policy to bring inflation to 2 per cent | hawkish |
The very rapid upturn in inflation last year has meant that CPIF inflation is now just over 10 per cent and thus far above the inflation target. | negative |
The Riksbank underestimated the inflationary impulse in the wake of the pandemic and factors that were difficult to predict, such as Russia’s invasion of Ukraine and the ensuing disruptions on the European energy markets, aggravated the situation further. | neutral |
To bring down the high inflation, the Riksbank has raised its policy rate at every meeting since April 2022, in total from zero per cent to 2.5 per cent at the end of 2022. | hawkish |
The increase has been rapid in relation to earlier phases of interest rate hikes and we are already seeing the effects on demand in the Swedish economy. | neutral |
As it takes time before monetary policy affects inflation, the effects will only become clear this year. | neutral |
Monetary policy needs to be tightened further | hawkish |
A high rate of inflation creates problems in the economy and given the risk of inflation becoming entrenched, the Executive Board assesses that monetary policy needs to be tightened further. | hawkish |
It is important that inflation shows a clear downturn this year and that it is not merely due to lower energy prices. | neutral |
There are many indications that this will happen. | negative |
But it is uncertain whether inflation will fall sufficiently quickly and far enough. | negative |
There is a risk that the recent rapid price rises will develop into a changed pricing behaviour and that inflation will then, even if it slows down somewhat, become entrenched at a level that is too high. | negative |
The measures that the Riksbank is now taking in the form of a repo-rate cut, restored interest rates for fine-tuning transactions and the purchase of government bonds underlines the Riksbank's determination to safeguard the role of the inflation target as a nominal anchor for price setting and wage formation. | dovish |
In order to ensure that inflation rises towards the target, the Riksbank is prepared, should the need arise, to quickly make monetary policy more expansionary, even between the ordinary monetary policy meetings. | dovish |
This will primarily entail making further repo-rate cuts, postponing the first repo-rate increase and increasing the purchases of government bonds. | dovish |
A programme for lending to companies through the banks may also be considered (see the article "The Riksbank’s complementary monetary policy measures"). | dovish |