Monetary policy decision December 2018 Strong economic activity - PowerPoint PPT Presentation

Monetary policy decision December 2018

Strong economic activity creating conditions for inflation to remain close to target going forward. Appropriate to slightly reduce support from monetary policy.

Inflation at 2 per cent and stronger confidence in the target Annual percentage change. Source: Statistics Sweden

Core inflation has been lower 3 3 CPIF, November outcome 2 2 1 1 0 0 -1 -1 11 12 13 14 15 16 17 18 Annual percentage change. The field shows the highest and lowest Sources: Statistics Sweden and the Riksbank outcome among different measures of core inflation.

Rising prices in the short term Companies expecting higher prices New agreements indicate higher rents in 2019 Summer drought causing higher food prices

Continued strong economic activity in Sweden Growth has slowed High pressure on the labour market Annual percentage change and net figures respectively. Sources: National Institute of Economic Research, Statistics Sweden and the Riksbank

Good global economy, but with political uncertainty GDP growth abroad Gradually rising cost pressures 4 4 3 3 2 2 1 1 0 0 Wages, Germany Wages, United States Wages, Euro area -1 -1 06 08 10 12 14 16 18 Annual percentage change. The KIX is an aggregate of countries that Sources: Bureau of Economic Analysis, Bureau of Labour Statistics, are important for Sweden's international transactions. The right-hand Eurostat and the Riksbank figure shows labour cost per employee.

Good conditions for inflation close to target Continued good Swedish economic activity Rising cost pressures Inflation expectations at 2 per cent Gradually rising inflation abroad

Repo rate to be raised at a slow pace Per cent. Source: The Riksbank

With slow rate increases, inflation will remain close to 2 per cent 3 3 Energy prices' contribution to the CPIF CPIF 2 2 1 1 0 0 -1 -1 11 13 15 17 19 21 Annual percentage change. The contribution of energy prices to the Sources. Statistics Sweden and the Riksbank CPIF in the forecast is calculated as the annual percentage change in energy prices multiplied by their current weight in the CPIF.

Monetary policy needs to proceed cautiously • Risks and uncertainty abroad • Need to remain vigilant about inflationary pressures • Monetary policy to be adjusted according to the development of the economic outlook and inflation prospects

Strong economic activity creating conditions for inflation to remain close to target going forward. Appropriate to slightly reduce support from monetary policy.