Monetary Policy Report, April 2021

The recovery in the global economy is continuing, even though infection has increased and restrictions have been comprehensive over the spring. Increasing numbers of people are being vaccinated and, with the significant fiscal and monetary policy support, conditions are good for demand to return rapidly even in contact-intensive services sectors, as soon as restrictions are eased. But there is still considerable uncertainty and the speed of the recovery varies substantially between different sectors and countries.

Towards the summer, growth is expected to gear up both in Sweden and abroad. The differences between various sectors and groups on the labour market are expected to remain high, but overall economic activity is expected to approach more normal levels towards the end of the year. The situation on the labour market will strengthen even if unemployment is expected to remain at a somewhat higher level for a further period, as a result of the lasting effects of the crisis.

The increasing resource utilisation creates the conditions for an upturn in inflation, but cost pressures are expected to rise relatively slowly. As during 2020, major variations in inflation are expected this year, too. It will take until the end of the forecast period before inflation is expected to be more permanently close to the target of 2 per cent.

Expansionary monetary policy in the years ahead is needed to support the economy and inflation. The Riksbank is therefore continuing to purchase assets within the envelope of SEK 700 billion and to offer liquidity within all the programmes launched. The Executive Board has also decided to hold the repo rate at zero per cent and it is expected to remain at this level in the years to come. The Riksbank will design monetary policy so that there is extensive monetary policy assistance for as long as necessary in order to support the recovery and inflation.