Monetary Policy Report, July 2021

The grip of the pandemic on the global economy has eased during the spring and early summer, and the recovery is well under way. More and more people have been vaccinated against COVID-19, the spread of infection has decreased significantly and restrictions have begun to be phased out. But the pandemic is not over. The recovery is proceeding at a different pace in different parts of the world, and new variants of the virus are creating continued uncertainty.

Outcomes and indicators over recent months confirm that the development of the Swedish economy, with the help of extensive economic policy support measures, is strong. Both in Sweden and abroad, the recovery is proceeding slightly faster than expected and the Riksbank’s forecasts have been revised up somewhat.

Inflation has varied to an unusually large degree during the pandemic. This is partly due to energy prices but also to measurement problems and people’s changed consumption patterns during the pandemic. Inflationary pressures are still deemed moderate and it is expected to take until next year before inflation rises more persistently.

The expansionary monetary policy is a prerequisite for inflation to be close to the target of 2 per cent more persistently. The Riksbank will continue to purchase securities and offer liquidity within all the programmes launched. The Executive Board has now decided that the Riksbank will buy bonds for an aggregate nominal amount of SEK 68.5 billion in the fourth quarter. This means that the pace of purchasing will continue to be tapered off but that the envelope for asset purchases of SEK 700 billion will be fully utilised up until the end of 2021. The Executive Board has also decided to hold the repo rate at zero per cent. The repo rate is expected to remain at zero per cent for the entire forecast period, which extends until the third quarter of 2024.