Minutes of the Monetary Policy Meeting held on 29 June 2022

The Riksbank needs to prevent high inflation becoming entrenched in price- and wage-setting, and to ensure that inflation returns to the target. The Executive Board therefore decided at its monetary policy meeting on 29 June to increase the policy rate by 0.5 percentage points to 0.75 per cent and to reduce the Riksbank's asset holdings faster during the second half of the year than what was decided in April.

The members observed that inflation has continued to rise rapidly and that price increases were spreading, in a worrying fashion, throughout the economy. A significant factor in this context is that companies have raised their prices more than they normally do in relation to the development in costs. The members noted that the forecast for inflation has been revised up significantly and several members pointed out that the framework for Swedish monetary policy, wage formation and fiscal policy are now being put to the test for the first time in a high-inflation environment. To safeguard confidence in the inflation target, the members were unanimous that monetary policy needs to be tightened further than they assessed in April. A unanimous Executive Board supported the decision to raise the repo rate from 0.25 to 0.75 per cent and to further reduce the pace of the Riksbank’s asset purchases during the second half of the year.

One important issue raised by a number of members is the high level of indebtedness among economic agents and how it is making it more difficult to assess how high interest rates will need to be for inflation to fall back. They pointed out that there is considerable uncertainty regarding future developments, and emphasised that forecasts are exactly that, forecasts and not promises, and that monetary policy may need to be constantly reviewed and adapted.

Several members also emphasised that they are prepared to do what is necessary to bring inflation down, even if this were to lead to weaker developments in the real economy in the near term. They also pointed out that it is important to act quickly with policy-rate increases in the immediate future to prevent a problematic development that requires even greater monetary policy tightening further ahead.

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