Minutes of Monetary Policy Meeting held on 27 October 2015

At the Monetary Policy Meeting on 27 October, the Executive Board of the Riksbank decided to purchase more government bonds during the first half of 2016 to a value of SEK 65 billion. The repo rate was left unchanged at −0.35 per cent but an initial raise in the rate was deferred by approximately six months and is now not expected to take place until the first six months of 2017. The expansionary monetary policy underlines the Riksbank's aim to safeguard the role of the inflation target as nominal anchor for price-setting and wage-formation.

It was noted at the meeting that the Executive Board agreed on the picture of economic prospects and the inflation outlook described in the draft Monetary Policy Report.

The expansionary monetary policy conducted by the Riksbank is contributing towards economic activity strengthening and a clear upward trend in inflation since last year. At the same time, however, there remains considerable uncertainty regarding the strength of the global economy and international monetary policy. But most indications are that the expansionary monetary policy will continue for a longer period. The Riksbank must take this into account.

Compared with the forecast in September, inflation is expected to by slightly lower in 2016 and 2017. But CPIF inflation is nevertheless expected to be close to 2 per cent in 2016. Without additional measures from the Riksbank, the rise in inflation could slow down, partly as a result of the Swedish krona appreciating earlier and more rapidly than forecast. In order to underpin the positive development in the Swedish economy and to safeguard the robustness of the upturn in inflation, monetary policy needs to be slightly more expansionary.

The Executive Board agrees unanimously to extend the purchases of government bonds by SEK 65 billion over the first six months of 2016. The Executive Board also agrees unanimously to leave the repo rate unchanged at −0.35 per cent and to defer an initial repo rate increase for about six months as compared with the assessment from September.

There remains a continued high level of preparedness to make monetary policy even more expansionary if inflation prospects should deteriorate, for example if the exchange rate strengthens faster than expected by the Riksbank. Several members here discussed various conceivable measures, such as purchases of other securities and currency interventions. The monetary policy pursued aims to limit the risks of continued low inflation and thus to safeguard the role of the inflation target as nominal anchor for price-setting and wage-formation.

Several members also commented on the current discussion of the inflation target. Finally, several members of the Executive Board again emphasised that there is a great need to promptly clarify mandates and tools within the area of macroprudential policy and to adopt measures to manage risks on the housing market and risks linked to household debt.

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