Minutes of the Executive Board’s monetary policy meeting on 4 July 2011

At its monetary policy meeting on 4 July, the Executive Board of the Riksbank decided to raise the repo rate by 0.25 percentage points to 2 per cent. The assessment of the majority of the Executive Board was that the Riksbank needs to raise the repo rate to stabilise inflation around the target of 2 per cent and resource utilisation around a normal level. The forecast for the repo rate, the so-called repo-rate path, was left unchanged. However, there are factors that may lead to the need to revise the repo-rate path in the period ahead. If the current high rate of CPI inflation has a tangible impact on long-term inflation expectations and on wage formation, it may be necessary to raise the repo-rate path. If the situation regarding public finances in certain European countries deteriorates, this may instead lead to the lowering of the repo-rate path.

The decision was made against the background of the monetary policy discussion. The discussion concluded that growth in the Swedish economy is still good, but that it will normalise during the forecast period. At the same time, the outlook abroad is marked by uncertainty. The recovery in the United States is more sluggish than expected and the euro area is burdened by problems with public finances. Resource utilisation in Sweden is expected to be normal or somewhat higher than normal, while it is predicted that wage increases will be normal. CPI inflation is high at present as a result of rising mortgage rates. When adjusted for mortgage rates inflation is significantly lower. In the longer term, inflation will approach the target of 2 per cent.

 

Deputy Governor Karolina Ekholm and Deputy Governor Lars E.O. Svensson entered a reservation against the decision to raise the repo rate by 0.25 percentage points to 2.0 per cent and against the repo-rate path in the Monetary Policy Report.

 

You can read the full minutes of the monetary policy meeting held on 4 July in the attached PDF file.

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