Account of Monetary Policy 2017 – Good target attainment and more accurate forecasts

Inflation back on target during 2017

The Riksbank has over several years conducted a very expansionary monetary policy to maintain confidence in the inflation target. This policy has, together with increasingly strong developments abroad, contributed to GDP growth being high, employment increasing, unemployment declining and inflation rising. During 2017, inflation was back close to the target; measured as the CPIF, inflation was 2.0 per cent on average. Long-term inflation expectations were also around 2 per cent over the year. Target attainment was thus good. However, it has taken a long time and required a very low repo rate and extensive asset purchases to attain this. The Riksbank therefore emphasised during the year that it would entail risks to change its policy too quickly, despite inflation being close to the target.

More accurate forecasts

The report also analyses the Riksbank's forecasts over the past three years. The forecasts made in 2016 succeeded for the most part in capturing economic developments and the upswing in inflation. The repo rate has also followed the Riksbank's forecasts relatively closely during the corresponding period. Previously, the Riksbank's forecasts for inflation have been less accurate than those of other analysts, but this trend has been broken in the inflation forecasts made in 2016 and 2017 for inflation in 2017. As in earlier years, the Riksbank's forecasts for real economic developments, especially for unemployment, compared well with those of other analysts.

The Riksbank Study "An evaluation of the Riksbank's forecasts" contains a more detailed review of the forecasts by the Riksbank and other analysts.

Facts

The Account of monetary policy provides material for the Riksdag Committee on Finance's annual assessment of the Riksbank's monetary policy.

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Updated 28/03/2018