There are good conditions for a rate of inflation close to the inflation target during the forecast period, but it assumes that the Swedish monetary policy continues to be expansionary.
The said governor Stefan Ingves at the monetary policy meeting on september 6, according to the minutes of the meeting.
He said that increased productivity and subdued wage growth means that domestic cost pressures are still moderate despite the stronger activity. The krona has also strengthened faster than the Riksbank had forecast in July. To it, as stated earlier, the fact that the core inflation rate in the world, is still below 2 per cent.
Stefan Ingves pointed out that this does not mean that the absence of upside risks for inflation in sweden.
”But would the rate of inflation in the future be higher than what the Riksbank expects, it is not difficult to reverse the direction of monetary policy and make it less expansive,” he said, adding that as he sees it is the Riksbank, not at all in the situation today.
Stefan Ingves also made reference to that market expectations about the future policy rate in both the united states and the euro area has fallen, and that it would be ”imprudent and risky for the Riksbank to go before the central banks in the major currency areas and begin to reduce the stimulus in monetary policy”.
He also said that against the background that the Swedish inflation has been low a long time, and it has taken an extraordinary monetary policy to bring inflation back to the target, and reversing inflation expectations, not is the time to change monetary policy.
”Inflation and inflation expectations need a more durable ”fix” than they have today, and with the history we have in the baggage, would an inflation rate above the target for a period of time not be a major problem,” said Stefan Ingves.
He further noted that, after a long period of low inflation, it is important that the Riksbank continues to work to ensure inflationsmålets central role as the anchor for price and wage formation in Sweden.
Monetary policy therefore needs to focus on to contribute to the rate of inflation long-term is around the target of 2 per cent. Small increases in the repo rate would have small effects on household indebtedness. A significantly higher repo rate would certainly be able to slow down the skulduppbyggnaden but at the same time lead to an increase in unemployment and to the credibility of the inflation target to be eroded. In addition, the lack of the Riksbank ”sector-specific instruments to manage the financial imbalances in the household sector.
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