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Minutes: Floden: Could have proposed a flatter path but don't rule out even faster hikes

RIKSBANK
  • "I see at least two reasons for the change in monetary policy that we are now planning, or perhaps an even smaller change, being sufficient for inflation to return to the target."
  • "Firstly, inflation according to the CPIF excluding energy does not necessarily reflect the underlying inflationary pressures... To some extent, these are necessary adjustments in relative prices, rather than a changed, long-term inflation pattern."
  • "Secondly, wages are still increasing at a moderate pace... If wage increases remain moderate, consumer prices will not be able to continue to rise rapidly."
  • "A higher policy rate will both weaken households’ and companies’ cash-flows and contribute to dampening their willingness to consume and invest. In this way, economic activity will be slightly lower and inflationary pressures will be dampened further ahead. But I do not see before me today any need for a major tightening to return inflation to the target."
  • "I suspect that interest-rate hikes according to our plan, combined with the high consumer prices, will lead to a slightly faster slowdown in economic activity than is included in our forecast and that it will then be appropriate to raise the interest rate at a slower pace than is indicated by the proposed repo-rate path."
  • "I could therefore have proposed a somewhat flatter path that indicated, for instance, greater probability for a further two, rather than three, increases this year. But the uncertainty over which monetary policy will be justified going forward is considerable, and I do not rule out the possibility that even faster interest rate rises than in the forecast might be needed."
  • "I believe that it would have been possible to cease the purchases of corporate bonds entirely and to reduce the other bond purchases at a faster pace than in the proposed decision, but as the proposal entails a clear tapering, I can nevertheless support it."
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