Monetary Policy Report, November 2023

Inflation is still too high and there are still risks that it will not continue falling fast enough and stabilise at the target. But inflation has fallen and inflationary pressures have clearly eased. The Executive Board has decided to hold the policy rate unchanged at 4 per cent. The Executive Board assesses that monetary policy needs to remain contractionary and is prepared to raise the policy rate further if inflation prospects deteriorate.

Monetary policy has contributed to inflationary pressures in the Swedish economy being on their way down: the short-term rate of increase in consumer prices is lower than before and companies are making downward adjustments to their plans to raise prices. However, inflation remains too high and there are still risks that it will not fall fast enough going forward. Prices for services are increasing at a rapid pace and contributing significantly to total inflation. In addition, the krona is still unjustifiably weak, which is holding up the rate of price increase for goods.

As a result of the implemented policy rate hikes, demand in the Swedish economy is slowing down. The slowdown of the economy is now also beginning to reach the labour market. GDP is expected to continue falling for some time to come, at the same time as developments in the labour market slow down somewhat further. The lower activity in the Swedish economy, together with an expected strengthening of the krona exchange rate, will contribute to inflation falling towards the target during the course of next year.

The forecast for the policy rate is that it may be raised further at the start of next year and that monetary policy needs to be contractionary for a relatively long period of time for inflation to fall back and stabilise close to the target of 2 per cent. New information and how it is assessed to affect the economic outlook and inflation prospects will be decisive in determining the monetary policy stance.