monetary policy report 2008:3
DESCRIPTION
Monetary Policy Report 2008:3. Repo rate cut to 3.75 per cent Further cuts over the coming six months To alleviate the effects of the financial crisis on economic activity and to attain the inflation target of two per cent. Repo rate cut. Financial crisis Credit crunch - PowerPoint PPT PresentationTRANSCRIPT
Repo rate cut to 3.75 per cent Further cuts over the coming six
months
To alleviate the effects of the financial crisis on economic activity and to attain the inflation target of two per cent
Financial crisis Credit crunch Deeper economic downturn Lower inflationary pressures
Other measures also necessary to improve the functioning of the markets
Repo rate cut
The financial crisis……affects for instance Interest rates Stock markets Commodity prices Exchange rates
Interbank rate and repo ratePer cent
Sources: Reuters EcoWin and the Riksbank
0
1
2
3
4
5
6
7
8
99 00 01 02 03 04 05 06 07 08 09
0
1
2
3
4
5
6
7
8
Repo rate
Three-month interbank rate
Mortgage rates have risen more than the repo ratePer cent
Sources: Reuters EcoWin, SBAB, Statistics Sweden and the RiksbankRefers to three-month mortgage rate from SBAB, three-month interbank rate and monthly average for three-month mortgage rate for mortgage institutions’ new lending.
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
jan/07 apr/07 jul/07 okt/07 jan/08 apr/08 jul/08 okt/08
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0Repo rateInterbank rateMortgages – SBABMortgages – averages
Falling stock marketsIndex, 1999-01-04=100
Source: Reuters EcoWin
50
70
90
110
130
150
170
190
210
230
250
99 00 01 02 03 04 05 06 07 08
50
70
90
110
130
150
170
190
210
230
250Euro area (EuroStoxx)
Sweden (OMXS)
USA (S&P 500)
Lower oil priceBrent crude, USD per barrel
Note. Futures prices are calculated as a 15-day average.Sources: Intercontinental Exchange and the Riksbank
0
20
40
60
80
100
120
140
00 01 02 03 04 05 06 07 08 09 10 11
0
20
40
60
80
100
120
140Oil price, outcomeSpot price 22 October 2008Futures, 16 October 2008Futures, MPU September 2008
Falling commodity pricesUSD, index (2000 = 100)
Source: The Economist
100
150
200
250
300
350
04 05 06 07 08100
150
200
250
300
350
FoodMetalsOther agricultural productsTotal
Weaker kronaTrade-weighted exchange rate (TCW), index, 1992-11-18=100
Note. Broken line refers to the Riksbank’s forecast (quarterly data).Source: The Riksbank
120
122
124
126
128
130
132
134
136
04 05 06 07 08 09 10 11
120
122
124
126
128
130
132
134
136TCW-index
TCW-forecast MPUSeptember 2008TCW-forecast MPR 2008:3
Deeper economic downturn
Lower capital value More difficult to borrow Lower demand from abroad Increased uncertainty
Lower growth abroad and in SwedenAnnual percentage change, calendar-adjusted data
Sources: The IMF, Statistics Sweden and the RiksbankNote. Broken line and bar represents the Riksbank’s forecast.
-3
-2
-1
0
1
2
3
4
5
6
1980 1985 1990 1995 2000 2005 2010
-3
-2
-1
0
1
2
3
4
5
6SwedenThe world
Pessimism among households…Net figures
Source: National Institute of Economic Research
-60
-40
-20
0
20
40
60
98 99 00 01 02 03 04 05 06 07 08
-60
-40
-20
0
20
40
60
The Swedish economyOwn financesLabour market
… and in the business sectorSeasonally-adjusted index and net figures, manufacturing industry
Sources: National Institute of Economic Research and SwedbankNote. Index over 50 is growth, under 50 is decline.
30
34
38
42
46
50
54
58
62
66
70
01 02 03 04 05 06 07 08
-30
-24
-18
-12
-6
0
6
12
18
24
30Purchasing managers’ index (left scale)
NIER's Confidence indicator (right scale)
Lower GDP growthQuarterly changes in per cent calculated as an annual rate, seasonally-adjusted data
Note. Broken lines represent the Riksbank’s forecasts.Sources: Statistics Sweden and the Riksbank
-1
0
1
2
3
4
5
6
7
00 01 02 03 04 05 06 07 08 09 10 11
-1
0
1
2
3
4
5
6
7MPR 2008:2
MPU September 2008
MPR 2008:3
Lower employmentThousands, seasonally-adjusted data, 3-month moving average
Note. Redundancy notices include outcomes to 20 October.Source: Swedish Employment Service
0
10
20
30
40
50
60
70
80
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10
0
3
6
9
12
15
18
21
24New vacant jobs
Unfilled vacant jobs
Redundancy notices (right scale)
Higher unemploymentPer cent of work force, seasonally-adjusted data
Sources: Statistics Sweden and the RiksbankNote. Broken lines represent the Riksbank’s forecasts
0
2
4
6
8
10
12
14
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10
0
2
4
6
8
10
12
14Unemployment 16-64 yearUnemployment 15-74 yearMPR 2008:3MPU September 2008
Lower inflationCPI, Annual percentage change
Sources: Statistics Sweden and the RiksbankNote. Broken lines refer to the Riksbank’s forecasts
-1
0
1
2
3
4
5
04 05 06 07 08 09 10 11
-1
0
1
2
3
4
5
MPR 2008:3
MPU September 2008
Lower repo ratePer cent, quarterly average
Source: The RiksbankNote. Broken lines represent the Riksbank’s forecasts
0
1
2
3
4
5
6
00 01 02 03 04 05 06 07 08 09 10 11
0
1
2
3
4
5
6MPR October 2008
MPU September 2008
Uncertainty in the forecasts
Global economic activity and financial crisis worsen
Higher inflationary pressures Weaker krona
Repo rate a forecast – not a promisePer cent, quarterly averages
Source: The Riksbank
0
1
2
3
4
5
6
7
04 05 06 07 08 09 10 11
0
1
2
3
4
5
6
790%75%50%Repo rate
Measures for the financial system
Loans (against collateral) in SEK and USD
Changed collateral requirements Liquidity assistance to Kaupthing
Riksbank’s loansOffered Implemented
SEK SEK 280 billion SEK 180 billion(Further SEK 80 billion Monday 27/10)
USD USD 27 billion USD 27 billion (approx. SEK 130 billion)
Assumption: 1 USD=7.5 SEK
Measures taken by the Government sector The Riksbank SEK 380 billion
Swedish National Debt Office SEK 100 billion(Can be compared with outstanding stock of covered mortgage bonds:
approx. SEK 1 000 billion at end of August 2008)
Government Finansinspektionen
(Swedish Financial Supervisory Authority)