Minutes of the Executive Board's monetary policy meeting on 25 October 2010

 

At its monetary policy meeting on 25 October, the Executive Board of the Riksbank decided to raise the repo rate by 0.25 percentage points to 1.0 per cent. The Executive Board deemed that the repo rate gradually needs to be raised in order to stabilise inflation close to the Riksbank’s target of 2 per cent and to attain a normal level of resource utilisation in the Swedish economy. However, the weak level of growth abroad means that, in the coming years, the repo rate will not need to be raised by as much as the Executive Board calculated in its forecast at the start of September.

The conclusion of the monetary policy discussion can be be summarised by stating that the Swedish economy is showing strong growth. Inflationary pressures are low, but are expected to increase as economic activity strengthens. The broad upswing in the Swedish economy is also contributing to a rapid increase in employment. At the same time, developments overseas remain uncertain. The recovery is expected to take time in the United States, while the major fiscal policy tightening measures in several European countries are dampening growth in Europe. The slow recovery of these countries is leading to moderate inflationary pressures and low international interest rates.

Deputy Governor Karolina Ekholm and Deputy Governor Lars E.O. Svensson entered a reservation against the decision to raise the repo rate by 0.25 percentage points to 1.0 per cent and against the forecast repo rate (the repo rate path) in the Monetary Policy Report.

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The Riksbank is Sweden's central bank and an authority under the Riksdag, the Swedish parliament. The Riksbank is responsible for monetary policy with the objective to maintain price stability. The bank has also been given the task to promote a safe and efficient payment system.

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