Monetary Policy Report, September 2023
The Riksbank’s rate increases and the falling energy prices have contributed to inflation beginning to fall. Developments are thus going in the right direction, but inflationary pressures in the Swedish economy are still too high. For inflation to fall back and stabilise around the target of 2 per cent within a reasonable period of time, the Executive Board has therefore decided to raise the policy rate by 0.25 percentage points to 4 per cent. The forecast for the policy rate indicates that it could be raised further.
What is the policy rate?
policy rate, table
The monetary policy decision including the policy rate
- The Executive Board's monetary policy decision from the meeting on 20 September 2023 is summarised in a press release: Policy rate raised by 0.25 percentage points to 4 per cent
- Monetary policy decision document September 2023: Policy rate decision
- Read the Monetary Policy Report in full: Monetary Policy Report September 2023
In brief - Monetary policy September 2023
The tighter monetary policy has helped to reduce inflation. To ensure that inflation continues to fall and stabilise around the target within a reasonable period of time, monetary policy needs to continue to be tightened somewhat. The Executive Board has therefore decided to raise the policy rate by 0.25 percentage points, to 4 per cent. The decision is in line with the assessment at the monetary policy decision in June.
Inflation is falling in Sweden. The rate of increase in energy and food prices has slowed significantly, which is positive. But inflation pressures are still too high. Service prices continue to rise at a rapid pace, which, together with the unjustifiably weak krona, contribute to keeping up inflation and increasing the risk that inflation will not continue to fall and stabilise around the target sufficiently quickly.
The policy rate is at a contractionary level, and is dampening demand in the economy. This is necessary for inflation to fall back towards the target within a reasonable period of time. According to the Riksbank's forecast, GDP is expected to fall somewhat going forward, at the same time as in the labour market slows down. Together with an expected modest appreciation of the krona in the coming years, this will help inflation to fall back and be close to the target of 2 per cent in 2024.
The forecast for the policy rate indicates that it can be raised further. As before, the assessment is that monetary policy needs to be contractionary for a longer period of time for inflation to fall back and stabilise close to the target of 2 per cent. New information and how it is expected to affect the outlook for the economy and inflation will be decisive in determining the monetary policy stance.