Executive Board at Committee on Finance hearing on current monetary policy
News, Speeches Inflation is back close to the target. The policy rate has been cut three times in five months and is expected to be cut further in the future. Low and stable inflation and lower interest costs are improving households’ finances and making it easier for companies to invest. This is contributing to brighter prospects in the Swedish economy. That was the message from members of the Riksbank’s Executive Board when they took part in this year’s second hearing at the Riksdag Committee on Finance on current monetary policy on Tuesday.
Governor Erik Thedéen began the hearing by pointing out how the Executive Board has gradually, but rapidly, eased monetary policy as inflation has fallen and shown signs of stabilising close to the target. At the same time, economic activity is weak.
“With inflation close to target and strong confidence in the inflation target, there is scope for monetary policy to provide more support to economic activity. It is important in itself that economic activity strengthens, but it is also a necessary condition for inflation to stabilise close to the target. This is why, at our September meeting, we judged that the policy rate will be cut at a faster pace going forward.”
“The direction is clear, interest rates are about to fall further,” said Mr Thedéen. But he added that there are a number of risks that require continued vigilance, mentioning the situation in the Middle East in addition to the economic recovery in Sweden and abroad.
“Our next monetary policy meeting will be in three weeks, this time in Falun. Ahead of this decision, we will, as usual, make an overall assessment of how recent developments affect the outlook for inflation and economic activity and determine the best pace at which to adjust monetary policy to stabilise inflation at the target and contribute to good economic development in Sweden.”