Ingves: Hearing of the Riksdag Committee on Finance on monetary policy 2018

On Thursday, the entire Executive Board of the Riksbank took part in an open hearing of the Riksdag Committee on Finance on the report Account of Monetary Policy 2018. The report forms part of the material for the annual assessment of monetary policy by the Riksdag Committee on Finance.

Date: 02/05/2019 10:00

Speaker: Governor Stefan Ingves

Place: Förstakammarsalen, the Riksdag, Stockholm

Governor Stefan Ingves opened the hearing by summarising the report. Robert Bergqvist and Anna Seim presented their views on the Account and on the monetary policy stance. After this, First Deputy Governor Kerstin af Jochnick commented on the discussion before committee members asked questions.

Stefan Ingves pointed out that target attainment had been good in recent years, CPIF inflation was at 2 per cent in both 2017 and 2018. At the same time, economic activity has been strong and the employment rate has been at the highest level for more than twenty years. During 2018, however, energy prices contributed a lot to CPIF inflation and there were questions regarding the strength of inflationary pressures during the year. But there were good conditions for inflation being around the target level and in December the Riksbank raised the repo rate for the first time since 2011, from −0.5 to −0.25 per cent. 

The Riksbank has over several years conducted a very expansionary monetary policy to safeguard confidence in the inflation target. The negative repo rate and purchases of Swedish government bondshave had an effect on other interest rates in the economy. This has helped both inflation and inflation expectations to rise to 2 per cent, after a negative trend up to 2014/2015.

The forecasts made by the Riksbank in 2016–2017 predicted CPIF inflation and economic developments relatively well on the whole. On the other hand, the krona has been weaker than expected and in the debate there has been a focus on the responsibility of monetary policy with regard to the development of the krona. Stefan Ingves noted that it is important to clarify that the starting point for monetary policy is that Sweden has an inflation target, and not an exchange rate target.

Updated 02/05/2019