Minutes of the Monetary Policy Meeting held on 27 April 2020

At the monetary policy meeting on 27 April 2020, the Executive Board of the Riksbank decided on continued purchases of government and mortgage bonds up to the end of September 2020 and to leave the repo rate unchanged at zero percent.

The board members supported the assessments and analyses presented in the draft Monetary Policy Report. The corona pandemic has hit the world hard and restrictions to curb the spread of infection have substantially reduced activity in the global economy. Developments going forward are extremely uncertain and depend largely on the spread of the virus and the restrictions imposed to slow it down. The draft Monetary Policy Report therefore describes possible developments in two scenarios instead of in a single detailed forecast. 

Inflation is expected to be low this year. This is largely due to a sharp fall in the oil and electricity price. The members therefore assessed that the decline in inflation should be temporary. It is emphasised, however, that it will be difficult to measure and interpret inflation in the prevailing situation. Several members also pointed out the importance of longer-term inflation expectations not being affected by the temporary decline in inflation but remaining anchored close to the inflation target.

The changed economic conditions have been reflected in substantial movements on the financial markets. Different markets have periodically functioned poorly, making it more difficult for banks and companies to fund their activities and for monetary policy to have an impact. To ensure that problems on the financial markets do not aggravate the situation further, the members felt that monetary policy needed just now to focus on measures that provide liquidity to the financial system and improve market functionality. This also creates the right conditions for a faster recovery when the economy begins to open up again. Ultimately, it also means that the possibilities to attain the inflation target improve. The members stressed that, since the ordinary monetary policy meeting in February, they have taken decisions on several different occasions on comprehensive measures which facilitate credit supply in the economy in different ways, and prevent interest rates offered to companies and households from rising when uncertainty increases.

All members supported the purchase of government and mortgage bonds for SEK 18 and SEK 85 billion respectively up until the end of September 2020, within the previously adopted framework decision. All of them also backed the decision to leave the repo rate unchanged. The members discussed why they did not consider it justified to cut the repo rate at this current time. However, they did not want to rule out the possibility of the repo rate being cut later on to stimulate demand in the recovery phase, and thereby safeguard price stability. The members underlined the importance of adapting the combination of measures to the economic situation. Several also stressed that managing the economic consequences of the crisis occurs in a collaboration among different policy areas, where not least fiscal policy is a central aspect.

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