Current forecast for the repo rate, inflation and GDP

27 April 2017

Monetary policy

At its latest monetary policy meeting, at the end of April, the Executive Board of the Riksbank noted that economic activity is good and is expected to strengthen further in the years ahead. But it is expected to take longer before inflation stabilises around 2 per cent. There is still considerable uncertainty over political and economic developments abroad. To continue to provide support for the rising rate of inflation, the Executive Board decided to extend the purchases of government bonds by SEK 15 billion over the second six months of 2017 and to hold the repo rate unchanged at -0.50 per cent. The repo rate is not expected to be raised until mid-2018, which is slightly later than in the last forecast.

Repo rate with uncertainty bands

Per cent, quarterly averages

  Repo rate with uncertainty bands

Inflation

Inflation has shown a rising trend since 2014. In particular, energy and food prices have increased at a faster rate recently. However, inflation measured as the CPIF excluding energy is lower than it was one year ago. The strong economic activity in Sweden and rising international price pressures mean the conditions are right for higher inflation in the coming years. CPIF inflation is expected to stabilise around 2 per cent at the beginning of 2019.

CPI with uncertainty bands

Annual percentage change

CPI with uncertainty bands

CPIF with uncertainty bands

Annual percentage change

 CPIF with uncertainty bands

GDP

Swedish economic activity is good and is expected to strengthen further over the next few years. Confidence indicators show that households and companies are optimistic and demand for exports is strong. The economic upturn means that the demand for labour is still strong.

GDP with uncertainty bands

Annual percentage change, seasonally-adjusted data

 GDP with uncertainty bands

Notes and sources for the figures

The uncertainty bands illustrate the 50, 75 and 90 per cent chances of the repo rate, inflation and GDP growth being within the respective range. The bands are based on historical forecast errors. The uncertainty bands for the repo rate do not take into account the fact that there may be a lower bound for the repo rate. The outcomes for GDP are also uncertain, as the National Accounts figures are revised several years after the first publication.


 

Sources: Statistics Sweden and the Riksbank.

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