What is the interest rate path?
It takes time before monetary policy has a full impact on inflation and the real economy. Monetary policy is therefore guided by forecasts for economic developments. The Riksbank’s publications include an interest rate path, which is an assessment of the future path for the policy rate.
The current interest rate path
The interest rate path is made public in conjunction with the publication of the monetary policy decision and the Monetary Policy Report. The current interest rate path can be found in the most recent Monetary Policy Report.
The interest rate path – a forecast for the policy rate
In connection with every monetary policy decision, normally five times a year, the Executive Board makes an assessment of the development of the policy rate that is needed for monetary policy to be well-balanced. The most important reason for publishing the Executive Board’s assessment of the future development of the policy rate is that it will help the Riksbank to explain to the general public and actors on the financial markets how the Riksbank assesses the direction for monetary policy and thereby future interest rate developments. This will make monetary policy easier to understand, to predict and to evaluate.
The interest rate path is a forecast, not a promise
However, it is important to emphasise that the Riksbank, in presenting its view of what is a suitable path for the policy rate, has not committed itself to any particular future monetary policy. As with all other assessments, the interest rate forecast will need to be revised on the basis of new information received on economic developments in Sweden and abroad and the effects this may have on the prospects for inflation and economic activity in Sweden. Therefore there is always some uncertainty over future interest rate developments in the same way that there is uncertainty over the general future development of the economy.