The Riksbank has announced an unchanged policy stance and the repo rate path is the same as in July, with the first hike (some 10bp) indicated in Q3 18. Asset purchases continue according to plan.
On inflation, the Riksbank says that recent outcomes have been higher than expected but underlines that this is due primarily to higher services prices (airfares), which should be temporary. However, strong growth and stimulatory monetary policy should help to hold inflation close to the target. The Riksbank revised up its inflation forecast somewhat over the forecast horizon. Note the message here is that the inflation forecast suggesting inflation close to target is conditioned partially by a sustained strong monetary stimulus as expressed in the repo rate forecast.
The Riksbank repeated that as inflation has been undershooting for such a long period, inflation being above target temporarily does not justify tighter policy near term.
On growth (the GDP forecast has been revised up), the Riksbank stresses that recent high GDP figures have been driven mainly by strong productivity, which dampens cost pressure. In addition, nominal wage growth is moderate and the Swedish krona has appreciated faster than expected. It repeated that Riksbank policy cannot deviate too much from that of other central banks.
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