Minutes of the Monetary Policy Meeting held on 19 December 2018

Press release, Minutes At the monetary policy meeting on 19 December 2018, the Executive Board of the Riksbank decided to raise the repo rate by 0.25 percentage points to –0.25 per cent. The forecast for the repo rate indicates that the next rate rise will probably occur during the second half of 2019.

A majority of the Executive Board supported the picture of the economic outlook and inflation prospects described in the draft Monetary Policy Report. Internationally, the outlook for economic activity is still good and largely unchanged since October. In Sweden, resource utilisation remains high, even though outcomes for GDP growth and inflation have been weaker than expected. The labour market is continuing to develop strongly. CPIF inflation and inflation expectations are close to or slightly above 2 per cent.

Several members noted that even though the inflation forecast for the next few years has also been revised downwards slightly, the conditions are still good for inflation to remain close to the inflation target. As inflation and inflation expectations have become established around 2 per cent, the need for a very expansionary monetary policy has decreased slightly and in light of this, a majority of Executive Board members considered it appropriate to now raise the repo rate by 0.25 percentage points to −0.25 per cent.

Board members stressed that the risks regarding developments abroad remain since the last monetary policy meeting in October. They also noted the uncertainty over the strength of inflationary pressures in light of recent, lower-than-expected inflation outcomes. In this context, the importance of monetary policy being adapted to the outlook for the economy and inflation was underlined. The forecast for the repo rate indicates that the next repo rate rise will probably occur during the second half of 2019.

A few board members also emphasised the risks associated with the Swedish housing market and the high level of household indebtedness.

Deputy Governor Per Jansson entered a reservation against the decision to raise the repo rate and did not support the repo-rate path in the Monetary Policy Report. Mr Jansson referred to the considerable uncertainty remaining over the strength of the more persistent rate of inflation and given this sees no need to raise the repo rate at present, considering it better to await further information and proceed cautiously with an unchanged repo rate for now.

Updated 09/01/2019
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