slides from the press conference 1 july 2020 · 1/7/2020 · slides from the press conference 1...
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The Riksbank’s monetary policy
1 July 2020
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Sharp fall in the Swedish economy
The Riksbank’s measures are keeping interest rates low
in order to help the economy recover
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Sharp fall in Swedish GDP
Annual percentage change Sources: Statistics Sweden and the Riksbank
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Major economic consequences of the pandemic
Industrial output Retail trade
Index December 2019 = 100. Retail sales in current prices for the US
and in fixed prices for Sweden and the euro area.
Sources: U.S. Census Bureau, Eurostat , Federal Reserve
and Statistics Sweden
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Many people losing their jobs
Unemployment, Sweden Unemployment, USA
Percentage of the labour force aged 16–64 and percentage of the
labour force over 16 years old. Seasonally adjusted data.
Sources: Swedish Public Employment Service
and the US Bureau of Labor Statistics
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Companies: “The direction gives reason for hope”
• Extensive economic policy measures
• Restrictions have been eased
• Weekly statistics indicate a cautious upturn
• Confidence indicators have risen slightly from low levels
• But companies think it will take time before the situation
becomes more normal
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The Riksbank’s measures have pushed down interest rates and facilitated credit supply
Market rates have come down
Lending to households and companies
has been sustained
Yields on 5-year bonds, per cent, and annual growth rate respectively. Sources: Macrobond, Statistics Sweden and the Riksbank
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Further measures to keep interest rates low and maintain access to low-cost funding
500billion
Extend maturity period for lending to banks
Cut lending rates to banks
Increase securities purchases
4years
0%interest rate
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Further measures to keep interest rates low and maintain access to low-cost funding
500billion
Increase securities purchases
• Increased from SEK 300 to SEK 500 billion
• Extended to end of first half of 2021
• Government, mortgage and municipal bonds and commercial
paper
• Begin purchases of corporate bonds
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Further measures to keep interest rates low and maintain access to low-cost funding
Extend maturity period for lending to banks • Banks can borrow from 3 months up to 4 years
at zero interest rate
• Ensures there is funding available at low cost
4years
Cut lending rates to banks
0%interest rate
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Monetary policy supporting the recovery and inflation
Sharp increase in balance sheet Zero interest rate
SEK billion and per cent. Source: The Riksbank
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Slow recovery in Swedish economy
Sharp fall in GDP Rapidly rising unemployment
Index 2019 Q1=100 and percentage of labour force respectively. Sources: Statistics Sweden and the Riksbank
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The crisis and temporary effects keeping inflation down
• Significant impact of the corona crisis and falling
energy prices
• Unusually uncertain statistics in the months ahead
• Inflation rising slowly towards the target
• Effects of the pandemic on inflation in the long term
are uncertain
Annual percentage change and percentage points.
Sources: SCB and the Riksbank
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Interplay between different policy areas most effective to alleviate the effects of the crisis
• Effective impact when policy areas collaborate
• Deep crisis requires extensive economic policy
support
• The Riksbank ready to do more if and when necessary
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Sharp fall in the Swedish economy
The Riksbank’s measures are keeping interest rates low
in order to help the economy recover