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Monetary
Policy Update
2008:2
Repo rate raised to 4.75 per cent
Repo rate will remain at same level
during the year
It may be necessary to reduce the rate
in 2009
To attain the inflation target of two
per cent
Repo rate raised
Inflation is high
Inflation expectations are high
Higher cost pressures
Repo rate path lowered
Lower oil and commodity prices
Weaker growth in Sweden and abroad
Repo rate raised to 4.75%
Per cent, quarterly averages
6 6
M PU September 2008
5 M PR 2008:2 5
4 4
3 3
2 2
1 1
0 0
00 01 02 03 04 05 06 07 08 09 10 11
Note: Broken line represent the Riksbank’s forecasts Source: The Riksbank
Inflation is high
Annual percentage change
5 5
CPI
M PU September 2008
4 M PR 2008:2 4
3 3
2 2
1 1
0 0
-1 -1
00 01 02 03 04 05 06 07 08 09 10 11
Note: Broken lines represent the Riksbank’s forecasts Sources: Statistics Sweden and the Riksbank
Inflation expectations still high
Annual percentage change
5 5
CPI
4 Households, NIER 4
Companies, NIER
3 3
2 2
1 1
0 0
-1 -1
00 01 02 03 04 05 06 07 08 09
Note: The latest outcomes for CPI and the companies’ inflation expectations are
from July and the latest outcome for households’ expectation is from August
Sources: NIER and Statistics Sweden
Inflation expectations high
Inflation expectations of various participants two years ahead
Annual percentage change
4 4
Purchasing managers
Social partners
M oney market agents
3 3
2 2
1 1
0 0
96 97 98 99 00 01 02 03 04 05 06 07 08
Note: Last outcome is from 18 June Source: Prospera Research AB
Weak productivity
Annual percentage change, seasonally-adjusted data
5 5
4 4
3 3
2 2
1 1
0 0
M PR 2008:2
-1 M PU September 2008 -1
HP-trend
-2 -2
93 95 97 99 01 03 05 07 09 11
Note: Broken lines represent the Riksbank’s forecasts Sources: Statistics Sweden and the Riksbank
Interest rate path lowered
Lower oil and commodity prices
Weaker growth in Sweden and internationally
Oil price still high
USD per barrel
140 140
Oil price, outcome
120 Average up to and including 28-08-2008 120
Average up to and including. 27-06-2008 (M PR 2008:2)
100 100
80 80
60 60
40 40
20 20
0 0
00 01 02 03 04 05 06 07 08 09 10 11
Note. Futures are calculated as a 15-day average Sources: Intercontinental Exchange and the Riksbank
Weaker GDP growth in
Sweden
Quarterly changes in per cent calculated as an annual rate
7 7
M PR 2008:2
6 6
M PU September 2008
5 5
4 4
3 3
2 2
1 1
0 0
-1 -1
00 01 02 03 04 05 06 07 08 09 10 11
Note: Broken lines represent the Riksbank’s forecasts Sources: Statistics Sweden and the Riksbank
Employment
Thousands, seasonally-adjusted data
5000 5000
Employed (ILO definition)
4800 Employed (EU definition) 4800
4600 4600
4400 4400
4200 4200
4000 4000
3800 3800
00 01 02 03 04 05 06 07 08 09 10 11
Note: Broken line represent the Riksbank’s forecasts Sources: Statistics Sweden and the Riksbank
Pessimistic households
Confidence figures for households, net figures
40 160
Sweden (left scale)
30 Euro area (left scale) 145
USA (right scale)
20 130
10 115
0 100
-10 85
-20 70
-30 55
00 01 02 03 04 05 06 07 08
Sources: European Commission, NIER, and University of Michigan
Continued financial unease
Basis points
120 120
Sweden
Euro area
100 100
USA
UK
80 80
60 60
40 40
20 20
0 0
Jan/ 07 Apr/ 07 Jul/ 07 Oct/ 07 Jan/ 08 Apr/ 08 Jul/ 08
Note: The difference is calculated as the difference between the Sources: Reuters EcoWin and the Riksbank
three-month interbank rate and the three-month overnight index swap.
Uncertainties in the interest rate
forecast
+ Higher inflation
+ Lower productivity
+ Inflation expectations
± Energy and commodity prices
– Poorer economic growth
– Financial unease
Repo rate a forecast – not a
promise
Per cent, quarterly averages
7 7
90%
75%
6 50% 6
Repo rate
5 5
4 4
3 3
2 2
1 1
0 0
04 05 06 07 08 09 10 11
Note: Broken line represents the Riksbank’s forecast Source: The Riksbank
Higher inflation and lower growth also
globally
Annual percentage change
4.5 4.5
GDP, OECD
4.0 4.0
CPI, OECD
3.5 3.5
3.0 3.0
2.5 2.5
2.0 2.0
1.5 1.5
1.0 1.0
0.5 0.5
0.0 0.0
00 01 02 03 04 05 06 07 08 09 10
Note: CPI outcome is monthly data and the forecast is an annual average Sources: OECD and the Riksbank
