Download Diagram to the speech

Introduction on
monetary policy
Riksdag Committee on
Finance,
15 November 2007
Governor Stefan Ingves
1. Driving forces behind
increased openness and clarity

Monetary policy works better


Efficiency reasons
Independence requires openness

Democratic reasons
2. Increased credibility
5
5
Inflation expectations
CPI
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
1994
-2
1996
1998
2000
2002
2004
2006
2008
2010
2012
Sources: Prospera Research AB and Statistics
3. Changes in our communication
2007
February
M ay
September
• Forecast for the repo rate
• M onetary Policy Report
• Press conference after each monetary policy meeting
• No signalling in normal cases
• Names in the minutes of the monetary policy meetings
• Repo rate forecast at each monetary policy meeting
• 6 times a year
4. Other changes…

Time lag between the Monetary
Policy Report and the hearing

UND1X has become CPIX
5. Swedish economy is
strong
GDP growth. Annual percentage change. Striped bars/broken lines
refer to the Riksbank’s forecast.
7
7
Sweden
The world
6
6
5
5
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
-3
-3
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
10
Sources: the IMF, the OECD and the Riksbank
6. Tighter labour market
Thousands of persons. Broken lines refer to the Riksbank’s forecasts.
4800
4800
Labour force
Employed
4700
4700
4600
4600
4500
4500
4400
4400
4300
4300
4200
4200
4100
4100
4000
4000
3900
3900
3800
3800
81
83
85
87
89
91
93
95
97
99
01
03
05
07
09
Sources: Statistics Sweden and the
7. Percentage open
unemployed
Per cent of labour force. Broken line refers to Riksbank’s forecast.
12
12
10
10
8
8
6
6
4
4
2
2
0
0
81
83
85
87
89
91
93
95
97
99
01
03
05
07
09
Sources: Statistics Sweden and the Riksbank
8. Wages expected to rise faster
Different agents’ expectations of the rate of wage increase two years ahead, Per cent
5
5
4
4
3
3
2
2
Employer organisations
Employee organisations
Purchasing managers
1
1
Wages in the business sector, outcome
0
0
98
99
00
01
02
03
04
05
06
07
08
09
Sources: The National Mediation Office and Prospera Research AB
9. Cost pressures increasing
Annual percentage change. Broken lines and striped bars refer to the
Riksbank’s forecasts.
8
8
Unit labour cost
7
7
Hourly labour cost
Productivity
6
6
5
5
4
4
3
3
2
2
1
1
0
0
-1
-1
94
96
98
00
02
04
06
08
10
Sources: Statistics Sweden and the Riksbank
10. Growth slackens in USA and euro
area
Annual percentage change. Broken lines refer to the Riksbank’s forecasts.
4,5
4,5
USA
4,0
4,0
Euro area
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
01
02
03
04
05
06
07
08
09
10
Sources: Eurostat, US Department of Commerce and the
11. Disruptions to the interbank
market
Percentage points. Difference between interbank rate and government bond
rate with three months duration for each respective country.
2,5
2,5
United States
Sweden
Euro area
United Kingdom
2,0
2,0
1,5
1,5
1,0
1,0
0,5
0,5
0,0
0,0
jan
feb
mar
apr
maj
jun
jul
aug
sep
okt
Source: The Riksbank
12. Inflation rises first then falls
back towards the target
Per cent. Broken lines refer to the Riksbank’s
forecasts.
4
4
CPI
CPIX
3
3
2
2
1
1
0
0
-1
-1
00
01
02
03
04
05
06
07
08
09
10
Sources: Statistics Sweden and the Riksbank
13. Two counteracting forces give
largely the same interest rate path as
in June…
Higher cost pressures
Tighter labour market
Financial unrest
Weaker growth in USA
and euro area
14. Higher repo rate in the
forecast
Per cent. Broken line refers to the Riksbank’s forecast.
7
7
90%
75%
50%
Repo rate
6
6
5
5
4
4
3
3
2
2
1
1
0
dec-02
dec-03
dec-04
dec-05
dec-06
dec-07
dec-08
dec-09
0
dec-10
Source: the Riksbank
15. Risks

Higher cost pressures

Financial unrest and weaker
international growth
16. Summary

The Swedish economy is doing well

Balanced development

Changes for a better monetary policy