130 likes | 209 Views
Monetary Policy Report July 2009. Deep economic downturn Repo rate cut to 0.25 per cent Low repo rate over a long time Inflation close to target Signs of a turnaround Positive growth in 2010. Low repo rate over a long period of time Per cent, quarterly average. Source: The Riksbank.
E N D
Deep economic downturn • Repo rate cut to 0.25 per cent • Low repo rate over a long time • Inflation close to target • Signs of a turnaround • Positive growth in 2010
Low repo rate over a long period of timePer cent, quarterly average Source: The Riksbank Note. Uncertainty bands calculated using historical forecasting errors.
Deep economic downturnGDP in Sweden, annual percentage change Note. GDP at recipient prices prior to 1951 from Edvinsson (2005). Sources: Statistics Sweden and the Riksbank
Low resource utilisation during entire forecast periodUnemployment, per cent of labour force, seasonally-adjusted data Note. Broken lines refer to the Riksbank’s forecasts. Sources: Statistics Sweden and the Riksbank
Signs of a turnaroundPurchasing managers’ index, index above 50 indicates growth in industry Note. Yellow dot refers to outcomes that were not available at the monetary policy meeting. Sources: Institute for Supply Management, NTC Research Ltd and Swedbank
Financial markets functioning betterBasis spread, basis points Sources: Reuters EcoWin and the Riksbank Note. Difference between 3-month interbank rate and expected policy rate (basis spread)
GDP growth will accelerate in 2010Quarterly changes in per cent calculated as an annual rate Sources: Bureau of Economic Analysis, Eurostat, OECD, Statistics Sweden and the Riksbank
Inflation close to the targetAnnual percentage change Note. Broken lines refer to the Riksbank’s forecasts. Sources: Statistics Sweden and the Riksbank
Uncertainty in the forecast • Interest rate could become higher… • Weaker productivity • Faster recovery abroad • …or lower • Higher loan losses • Lower rate of wage increase
Lending at a fixed interest rate • The repo rate has in practice reached its lower limit • The situation in the financial markets is still not completely normal • Lending with a fixed interest rate increases scope for monetary policy to have the intended effect • Contributes to lower interest rates for companies and households
Repo rate path a forecast – not a promise Per cent, quarterly average Note. Uncertainty bands calculated using historical forecasting errors. Source: The Riksbank
Deep economic downturn • Repo rate cut to 0.25 per cent • Low repo rate over a long period of time • Inflation close to the target • Signs of a turnaround • Positive growth in 2010