Current forecast for the repo rate, inflation and GDP
21 December 2016.
Continued strong monetary policy support
Increasingly strong economic activity creates the conditions for inflation to continue rising. But there are still risks that can jeopardise the upturn in inflation. Monetary policy therefore needs to remain very expansionary. At its monetary policy meeting in December, the Executive Board of the Riksbank therefore decided to hold the repo rate at –0.50 per cent and to increase purchases of government bonds by SEK 30 billion during the first half of 2016. Increases in the repo rate are not expected to begin until the beginning of 2018.
Repo rate with uncertainty bands
Per cent, quarterly averages
Inflation rising slowly
Inflation is rising and was 1.6 per cent in November measured in terms of the CPIF (the CPI with a fixed mortgage rate). Economic activity affects inflation after a time lag. As a result, the current healthy economic situation has not yet had a full impact on inflation. The conditions for continued rising inflation are therefore good. Inflation is expected to reach 2 per cent in the middle of 2018. In recent months, however, inflation has been unexpectedly low and there is still uncertainty as to how quickly inflation will rise in the period ahead.
CPI with uncertainty bands
Annual percentage change
CPIF with uncertainty bands
Annual percentage change
GDP – Swedish economy increasingly strong
The Riksbank's expansionary monetary policy, with a negative repo rate and purchases of government bonds, has had a broad impact and pushed down interest rates in the Swedish economy. Monetary policy has thus contributed to the positive development in the Swedish economy in recent years, with high growth and falling unemployment. Demand on many of Sweden's most important export markets is expected to increase over the coming years and this will contribute to an increase in investment needs among Swedish companies. GDP is expected to grow by 3.4 per cent in 2016 and then gradually decline to 2.1 per cent in 2019.
GDP with uncertainty bands
Annual percentage change, seasonally-adjusted data
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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