Riksbank Minutes: prices are increasing at a rate that is not compatible with the inflation target; members emphasised the risks associated with the continued high underlying inflation and the weak krona; policy rate may need to be increased further

BROADER COMMENTARY

• Excluding energy prices, annualised inflation is falling back more slowly. Also, when measured over shorter periods, such as month to month or quarter to quarter, prices are increasing at a rate that is not compatible with the inflation target.


• To ensure that inflation continues to fall and stabilise around the inflation target within a reasonable time.


• The Executive Board also assessed that the policy rate may need to be increased further.

FLODEN

• It probably takes time before the krona depreciation has full pass-through to prices.

BUNGE

• The effects of the tighter monetary policy are now showing up in the price statistics.


• The summer has been eventful for the Swedish krona, and it is now unexpectedly weak.


• Do not see any need for major changes to the plan from June.

JANSSON

• The updated inflation forecast is slightly higher than before even conditioned on this somewhat tighter monetary policy.


• It seems unwise to underestimate the significance for the krona of further rate increases by the Riksbank in a situation where many market participants believe that both the ECB and the Federal Reserve have reached their policy-rate peaks this time around.

BREMEN

• Monetary policy is demand and contributing to the current downturn in inflation.


• It is now primarily service prices, combined with a weak krona, that are holding up inflation in Sweden.


• Monetary policy needs to be contractionary for a period to come in order for us to return to sustainably low and stable inflation.

THEDEEN

• The most recent communication from the ECB has been interpreted by the market to mean that they have attained roughly the right level for their policy rates, and that the aim now is to remain at the current levels for a longer period of time. "In my opinion, the Riksbank is not there yet."


• This need not be at the next meeting; further tightening can come at a later stage.

Via Riksbank

Analysis details (08:47)

• Overall, the minutes are in line with the meeting. Interestingly, there is some reference to the possibility of the path needing to be tighter than currently implied - though, this is offset by mention that tightening need not occur at the next gathering but could arise at a later stage. Despite the ongoing SEK weakness, the minutes do not feature a discussion around potential FX-specific measures that could be introduced. 


• Reminder, the Bank announced FX hedging - though, this is not for monetary purposes.

02 Oct 2023 - 08:31- Fixed Income- Source: Riksbank