Monetary Policy Report, November 2020

The coronavirus pandemic has had a dramatic impact on the global economy this year, with sharp falls in GDP and rapidly rising unemployment. Governments and central banks around the world have implemented extensive support measures to alleviate the severe decline in the economy.

During the summer, a recovery was initiated, but in recent months the spread of infection has increased again and restrictions have been tightened in many countries. This setback shows the great uncertainty that the global economic recovery is still facing. The economic prospects for Sweden and abroad have been revised down, and the economy is expected to weaken again in the near term.

The recovery is expected to continue next year, but there is a long way back from the difficult economic situation in which the global economy presently finds itself. As was the case in September, it is expected to take time before economic activity is back at more normal levels, which means it will also take time before inflation is more permanently close to 2 per cent, in Sweden and many other countries.

To support economic developments and thereby contribute to inflation rising towards the target, the Executive Board has decided to extend the programme for asset purchases until 31 December 2021, to expand the envelope (by SEK 200 billion) to a total amount of up to SEK 700 billion and to retain the repo rate unchanged at zero per cent.