Monetary Policy

of Sweden
 The aim of monetary policy is to ensure that money retains its value over
time, something central banks normally try to achieve by influencing the cost
and availability of money in the economy. The Riksbank’s monetary policy
aims to keep inflation low and stable. In this way, the Riksbank contributes to
favourable economic development in Sweden. The decisions concerning
monetary policy are taken by the six members of the Riksbank’s Executive
Board.
 According to the Sveriges Riksbank Act, the objective for monetary policy is
to maintain price stability. The Riksbank has interpreted the objective to
mean a low, stable rate of inflation. More precisely: to keep inflation
measured in terms of the consumer price index with a fixed interest rate, the
CPIF, around 2 per cent per year. Even though the inflation target is the
overriding objective, monetary policy also supports general economic policy
objectives with a view to achieving sustainable growth and high employment.
 The Riksbank's main monetary policy tool is the repo rate. In some situations,
the repo rate may need to be supplemented with other measures to ensure
that monetary policy has an effective impact, read more on the page
Complementary monetary policy measures. At the monetary policy meetings,
the Executive Board takes decisions on the repo rate and makes an
assessment of the repo rate path needed and any other complementary
measures that may need to be implemented.
 It takes time before monetary policy has a full effect on the economy at large
and on inflation. Monetary policy is therefore guided by forecasts of economic
developments. The Riksbank includes an assessment of the future path for the
repo rate among its forecasts.
 The Riksbank is also responsible for financial stability. A stable financial system
is a prerequisite for the Riksbank to be able to conduct an effective monetary
policy. This is because the financial markets and the way they function affect
the impact that monetary policy has on the interest rates that households and
companies pay on their loans. Moreover, the economic consequences of a
financial crisis would directly affect price stability, growth and employment.
 As energy prices have increased rapidly, inflation is now high but the Riksbank
expects it to fall back over the year. Monetary policy needs to provide continued
support for inflation to be close to the target in the medium term. The Executive
Board has therefore decided to hold the repo rate at zero per cent and that the
Riksbank shall purchase bonds for SEK 37 billion during the second quarter of 2022
to compensate for maturing assets in the portfolio. The Executive Board’s forecast
is, as before, that the holdings will remain approximately unchanged in 2022 and
then decrease gradually. The forecast for the repo rate indicates that it will be
raised in the second half of 2024, which is slightly earlier than the Riksbank’s
assessment in November.
 The coronavirus pandemic continued to have a marked impact on economic
developments during 2021. The sharp fall in GDP from the start of the pandemic was
recovered and the employment rate rose to the same level as before the pandemic.
CPIF inflation rose rapidly during the year, mainly due to higher energy prices, and
was over 4 per cent at the end of the year. Disregarding energy prices, inflation was
close to the target of 2 per cent. Monetary policy aimed at creating good conditions
for an inflation rate more persistently close to the target. Given the extraordinary
disturbances that the world economy experienced during the pandemic, the target
fulfilment should be considered acceptable.
 The rate of inflation was mainly affected by increased housing costs, in which
costs of owning the home rose together with higher electricity prices.
Transport prices also increased, largely affected by rising fuel prices,
although rising car prices also contributed to the rate of inflation.
 Furthermore, prices rose on furnishings and household equipment, mainly
furniture. The same applies for food and non-alcoholic beverages, recreation
and culture and also restaurants and hotels where price increases contributed
to the rate of inflation.
 The inflation rate according to the CPIF excluding energy was 3.4 percent in
February, up from 2.5 percent in January.