Forecasts and interest rate decisions
The Executive Board of the Riksbank holds six scheduled monetary policy meetings a year and at these it decides on the monetary policy stance and on changes in the repo rate. A press release is published the day after each monetary policy meeting. This contains the most important reasons for and considerations behind the decision. The press release also contains the Riksbank’s forecasts regarding future developments in economic activity and inflation and a description of what monetary policy is currently considered to be well balanced. Following the publication a press conference is held with the Riksbank's Governor where media are given the opportunity to ask questions. In connection with three of the monetary policy meetings a Monetary Policy Report is published. This Report contains the Riksbank’s forecasts for the economy and inflation in the coming years. On the three other occasions a press release and a monetary policy update are published; the latter containing a limited number of forecasts for central macroeconomic variables.
The work on producing a base for the monetary policy meetings starts in the Monetary Policy Department. This department produces an internal document containing the staff's view of how economic activity and inflation will develop in the future. The department also produces a couple of alternative scenarios for economic developments. All of this is then reported to the Executive Board. This document is gradually revised into a Monetary Policy Report and functions as a basis for the press release that announces the interest rate decision.
The monetary policy decisions affect the economy and inflation with a time lag. This is one reason why the Riksbank must adopt a forward-looking approach and base its decisions on a forecast of future inflation and economic developments. There is no general answer to the question of how quickly the Riksbank aims to bring the inflation rate back to 2 per cent if it deviates from the target. The Riksbank’s ambition has generally been to adjust the repo rate and the repo rate path so that inflation is expected to be fairly close to the target in two years’ time. .
Approximately two weeks after the monetary policy meeting the minutes are published, which reproduce the discussion that led up to the interest rate decision. The minutes state how each of the members has reasoned with regard to monetary policy. After the minutes of the monetary policy meeting have been published, the members can hold speeches where they have the opportunity to further justify their stance in the monetary policy discussion.
More information about the decision-making process, the factors that influence interest rate decisions, and how the Riksbank communicates, can be found under the links on the menu.