Download Monetary Policy Update September 2009

Monetary Policy
Update
September 2009

Low repo rate over long period of time

Clearer signs of a turnaround

Recovery from a low level

Inflation close to the target
Low repo rate over a long period of
time
Per cent, quarterly averages
7
7
90%
6
6
75%
5
5
50%
Repo rate
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
04
05
06
07
08
09
ote. Uncertainty band calculated on the basis of historical forecasting errors.
10
11
12
Source: The Riksbank
Clearer signs of a turnaround
Purchasing managers’ index for manufacturing industry
70
70
Sweden
Euro area
USA
65
65
60
60
55
55
50
50
45
45
40
40
35
35
30
30
00
01
02
03
04
05
06
07
08
09
10
Sources: Institute for Supply Management, NTC Research Ltd and Swedbank
Financial markets functioning better
Basis spread, basis points
400
400
Sweden
350
350
Euro area
USA
300
300
United Kingdom
250
250
200
200
150
150
100
100
50
50
0
0
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Note. The difference beween 3-month interbank rate and expected policy rate (basis-spread)
Apr-09
Jul-09
Oct-09
Sources: Reuters EcoWin and the
Riksbank
Growth increasing in the world
GDP in Sweden, the eurozone and the USA,
quarterly change in per cent calculated as an annual rate, seasonallyadjusted data
8
8
4
4
0
0
-4
-4
-8
-8
Sweden
-12
-12
Euro area
USA
-16
-16
-20
-20
00
01
02
03
04
05
06
07
08
09
10
11
12
Sources: Bureau of Economic Analysis, Eurostat, Statistics Sweden and the Riksbank
The recovery will take time

Global imbalances must be corrected

Problems on the financial markets dampen
credit granting

Unusually rapid and large fall in production
and employment
Recovery from a low level
GDP level, index quarter prior to recession =100
120
120
1990s crisis, 1990 Q2
IT crisis 2000 Q3
115
115
Current crisis, 2008 Q1
110
110
105
105
100
100
95
95
90
90
-4
-2
0
2
4
6
Note. Broken lines refer to the Riksbank’s forecasts.
8
10
12
14
16
18
Sources: Statistics Sweden and the Riksba
High unemployment throughout the
forecast period
Unemployment, per cent of labour force, seasonally-adjusted
data
14
14
12
12
10
10
8
8
6
6
Unemployment 16-64 years
Unemployment 15-74 years
September
July
4
2
0
4
2
0
80
85
90
Note. Broken lines refer to the Riksbank’s forecasts.
95
00
05
10
Sources: Statistics Sweden and the Riksban
Stronger krona
Nominal exchange rate, TCW index, 18 Nov. 1992 = 100
160
160
September
155
155
July
150
150
145
145
140
140
135
135
130
130
125
125
120
120
04
05
06
07
08
Note. Broken lines refer to the Riksbank’s forecasts.
09
10
11
12
Source: The Riksbank
Underlying inflation close to the target
Annual percentage change
5
5
CPI
CPIF
4
4
CPIF excluding energy
3
3
2
2
1
1
0
0
-1
-1
-2
-2
00
01
02
03
04
05
Note. Broken lines refer to the Riksbank’s forecasts.
06
07
08
09
10
11
12
Sources: Statistics Sweden and the Riksban
Still considerable uncertainty




The foundations for the global recovery
are still fragile
Problems in the financial markets in
neighbouring regions
Stronger upturn abroad
Rapid normalisation of situation in the
financial markets
Further lending at a fixed interest rate

The situation on the financial markets has
improved but is still not normal
 Lending at a fixed interest rate increases the
chances of monetary policy having the intended
effect
 Contributes to continued low interest rates to
companies and households
Interest rate path a forecast – not a
promise
Per cent, quarterly averages
7
7
90%
6
6
75%
5
5
50%
Repo rate
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
04
05
06
07
08
09
Note. Uncertainty bands calculated using historical forecasting errors.
10
11
12
Source: The Riksbank

Low repo rate over a long period of time

Clearer signs of a turnaround

Recovery from a low level

Inflation close to the target