Minutes of the Monetary Policy Meeting held on 28 June 2023

Press release For inflation to return to the target of 2 per cent within a reasonable period of time, the Executive Board decided to raise the Riksbank’s policy rate by 0.25 percentage points to 3.75 per cent. The forecast for the policy rate is that it will be increased at least one more time this year. The Executive Board also decided to increase the pace of government bond sales from SEK 3.5 billion to 5 billion per month with effect from September this year.

The members noted that, although CPIF inflation has continued to fall since the monetary policy meeting in April, it is still far too high and far from the target of 2 per cent. In addition, the downturn is mainly explained by falling energy prices. Inflation adjusted for energy prices is falling slowly and the members expressed concern over this being due to an unexpectedly high rate of increase in service prices. The fact that service prices are still increasing rapidly indicates that demand pressures are still high in parts of the economy and this trend in service price increases can also be noted abroad.

The members pointed out that the krona has continued to depreciate since April and that there is also a risk that the pass-through of the weak krona to price increases will be greater in the current situation with high inflation. The weakening of the krona and continued high demand in the service sector contribute to the upward revision of the assessment of inflationary pressures. Several members noted that the risk of inflation becoming entrenched at too high a level has increased.

The Executive Board assessed that there was a need to raise the policy rate further to bring inflation back down to the target within a reasonable period of time and that it is appropriate to increase the pace of the normalisation of the Riksbank's balance sheet. The sales of government bonds are therefore being increased from SEK 3.5 billion to 5 billion per month, with effect from September this year. All members also supported the forecast showing that the policy rate will be raised at least one more time this year. However, they emphasised that monetary policy may need to be tightened more than in the forecast. New information and how it is expected to affect the economic outlook and inflation prospects will continue to be decisive for the design of monetary policy.

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Updated 10/07/2023