Questions and answers about the repo rate decision on 17 April 2012
The Executive Board of the Riksbank held the repo rate unchanged at its most recent meeting on 17 April. Why?
Following the sharp slowdown in the Swedish economy towards the end of last year, it is now possible to discern some positive signs. At the same time, inflation is low and expected to remain low in the coming period. Monetary policy needs to remain expansionary to support the recovery. The Executive Board of the Riksbank therefore decided to hold the repo rate unchanged at 1.5 per cent.
What has happened in the economy since the previous meeting in February?
Recent economic developments in the world differ from country to country. While the US economy continues to improve, economic prospects for the euro area are weak and the situation there is fragile. Swedish GDP declined towards the end of last year. However, the situation has improved somewhat since then. This can be noted, for instance, in the fact that sentiment among households and companies has been more positive and exports of goods have increased. At the same time, inflation is low, although cost pressures are now beginning to rise. On the whole, the economic outlook and inflation prospects for Sweden are roughly the same as they were in February.
How long will the repo rate remain at this level?
The repo rate is expected to remain at 1.50 per cent for around a year. After this, when inflationary pressures increase and economic prospects gradually improve, the repo rate will need to be raised gradually. This repo-rate path will contribute to stabilising inflation around 2 per cent and resource utilisation in the economy around a normal level.