Account of Monetary Policy in 2023 - The Riksbank's interest rate increases contributed to lower inflation

News Interest rate hikes and reduced global shocks led to inflation falling from over 10 per cent to close to the 2 per cent target by the end of the year. However, on average, inflation was far too high and, excluding energy prices, it remained at a high level even at the end of the year. To ensure that inflation would fall, monetary policy needed to be tighter in 2023 than the Riksbank had initially expected. Towards the end of the year, the Executive Board noted that inflationary pressures had subsided and at the November monetary policy meeting the policy rate was left unchanged for the first time since spring 2022.

Long-term inflation expectations remained firmly anchored to the inflation target, indicating that there was still strong confidence that inflation will stabilise around the target of 2 per cent in the medium term. Monetary policy is assessed to have played an important role in keeping long-term inflation expectations stable.

Low and stable inflation creates conditions for good economic development

The purpose of the Riksbank's interest rate increases has been to bring inflation back to the target within a reasonable time, without slowing down the economy unnecessarily. The tighter monetary policy has dampened economic activity. But it would have been worse to let high inflation take hold. High inflation has a major impact on households and businesses and is harmful to the economy as a whole. By attaining sustainably low and stable inflation, monetary policy creates the conditions for long-term favourable economic development.

The forecasts became more accurate over the year

Measured as the CPIF, the decline in inflation in 2023 was in line with the Riksbank’s forecasts. However, this measure is very much characterised by what happens to electricity prices. During the first half of the year, the CPIF excluding energy was significantly higher than expected and the forecasts had to be revised upwards. Both GDP and the labour market at the same time developed more strongly than in the Riksbank's forecasts. Since the middle of 2023, economic developments have been in line with the Riksbank's forecasts. Over the year, the Riksbank regularly included alternative scenarios in the Monetary Policy Reports to emphasise and illustrate the uncertainty surrounding the forecasts.

Read more about the monetary policy conducted last year in the report Account of Monetary Policy. It also discusses a number of issues from the monetary policy debate during the year, including whether inflation has been solely supply-driven, the interaction between fiscal and monetary policy and the evaluation of the Riksbank's asset purchases.


Every year, the Riksdag Committee on Finance examines and assesses the monetary policy conducted by the Riksbank during the preceding years. The Account of Monetary Policy provides a basis for that evaluation.

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Updated 22/03/2024