Transcript Till Karolina - Riksbanken | Sveriges Riksbank

Perspectives on
monetary policy
and the inflation
target
Riksdag Committee on
Finance
18 September 2012
Deputy Governor Karolina Ekholm
Making monetary policy decisions

The starting point is the forecast for factors we cannot
influence

Which repo-rate path provides the best target fulfilment
in terms of inflation and resource utilisation?

Are there other factors arguing against the repo-rate
path?
Why lower repo rate/repo-rate path?

The starting point is the forecast for factors we cannot
influence


Which repo-rate path provides the best target fulfilment
in terms of inflation and resource utilisation?


Policy rates abroad
Lower repo-rate path even without a different forecast for policy
rates abroad
Are there other factors arguing against the repo-rate
path?

Doubtful, and if so clarification of how this affects the decision is
necessary
Policy rates
abroad
Forecast for policy rates abroad July
2011 (yellow curve)
Per cent, forward rates from 22 June
4
4
Forward rates, TCW
Policy rate TCW, Riksbank’s forecast
Forward rates, Sweden
Repo rate, Riksbank’s forecast
3
3
2
2
1
1
0
0
11
12
13
14
Sources: National sources, Reuters EcoWin and the Riksbank
Forecast for policy rates abroad
September 2012 (yellow curve)
Per cent, forward rates from 31 August
4
4
Forward rates, TCW
Policy rate TCW, Riksbank’s forecast
Forward rates, Sweden
Repo rate, Riksbank’s forecast
3
3
2
2
1
1
0
0
12
13
14
15
Sources: National sources, Reuters EcoWin and the Riksbank
Target fulfilment
in terms of
inflation and
resource
utilisation
Monetary policy alternatives, Sept 2012
Foreign interest rates according to the main scenario. Sustainable unemployment 6.5%
Repo rate
CPIF
4
4
3
3
2
2
1
1
0
0
10
11
12
13
14
3
3
2
2
1
1
0
15
0
10
11
12
13
14
15
Unemployment
9
9
8
8
7
7
6
6
10
Main scenario Lower repo rate
11
12
13
14
15
Higher repo rate
Sources: Statistics Sweden and the Riksbank
Monetary policy alternatives, July 2012
Foreign interest rates according to the main scenario. Sustainable unemployment 6.5%
Repo rate
CPIF
4
4
3
3
2
2
1
1
0
0
10
11
12
13
14
3
3
2
2
1
1
0
15
0
10
11
12
13
14
15
Unemployment
9
9
8
8
7
7
6
6
10
Main scenario Lower repo rate
11
12
13
14
15
Higher repo rate
Sources: Statistics Sweden and the Riksbank
Monetary policy alternatives, April 2012
Foreign interest rates according to the main scenario. Sustainable unemployment 6.5%
Repo rate
CPIF
4
4
3
3
2
2
1
1
0
0
10
11
12
13
14
3
3
2
2
1
1
0
15
0
10
11
12
13
14
15
Unemployment
9
9
8
8
7
7
6
6
10
Main scenario Lower repo rate
11
12
13
14
15
Higher repo rate
Sources: Statistics Sweden and the Riksbank
Other factors?
Risks on the credit and housing
markets should be taken into account
if…

The credit and housing markets constitute a problem,…

…no one else is doing anything...

…and it is made clear how the repo rate is used for this
purpose and how it is weighed against the costs in terms
of poorer target fulfilment for inflation and
unemployment
Have not been taken into account
since autumn 2010 because…

The credit and housing markets have showed a more
stable development

In principle lower growth in household credits since 2006 and
stagnating housing prices since the end of 2010
Prices of single-family dwellings and
tenant-owned apartments
Index, January 2008 = 100
130
130
120
120
110
110
100
100
90
90
Valueguard (single-family house)
Mäklarstatistik (single-family house)
80
80
Valueguard (tenant-owned apartment)
Mäklarstatistik (tenant-owned apartment)
70
70
06
07
08
09
10
11
12
Note. All indexes are for Sweden. Valueguard is a hedonic price index. Mäklarstatistik (tenant-owned apartments)
is an index of prices per square metre and Mäklarstatistik (single-family dwelling) is an index of the C/I ratio.
Source: Mäklarstatistik
and Valueguard
Have not been taken into account
since autumn 2010 because…

Others have done something


Finansinspektionen’s mortgage cap 2010
It is unclear what is to be attained and how it is to be
assessed