Current forecast for the repo rate, inflation and GDP

7 September 2016

Monetary policy

Inflation is rising and the Swedish economy is developing strongly. However, there is still considerable uncertainty abroad. At its most recent monetary policy meeting at the start of September, the Executive Board of the Riksbank noted that the prospects for economic activity and inflation remain largely unchanged since the monetary policy meeting in July. The Executive Board makes the assessment that a continued expansionary monetary policy is needed to maintain the rising trend in inflation and has therefore decided to hold the repo rate unchanged at -0.50 per cent. Not until the second half of 2017 does the Executive Board consider it to be appropriate to begin slowly increasing the repo rate. The purchases of government bonds will continue during the second half of 2016, as decided in April.

Repo rate with uncertainty bands

Per cent, quarterly averages

  Repo rate with uncertainty bands

Inflation

CPIF inflation has shown a rising trend since 2014 and is now just below 1.5 per cent. The high level of GDP growth and improving labour market seen for a number of years mean that the conditions for continued rising inflation are in place. However, inflation has been low both in Sweden and abroad and, even if it is expected to continue to rise towards target, there is uncertainty about how quickly this could happen.

CPI with uncertainty bands

Annual percentage change

CPI with uncertainty bands

CPIF with uncertainty bands

Annual percentage change

 CPIF with uncertainty bands

GDP

Supported by the expansionary monetary policy, the Swedish economy has strengthened rapidly and activity is expected to continue to be strong over the next few years. The situation on the labour market has successively improved with rising employment and falling unemployment.

GDP with uncertainty bands

Annual percentage change, seasonally-adjusted data

 GDP with uncertainty bands

 

Notes and sources for the figures

The uncertainty bands show the 50, 75 and 90 per cent chances of the repo rate, inflation and GDP being within the respective range. The bands are based on historical forecast errors.

 

Sources: Statistics Sweden and the Riksbank.

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