MNI: Minutes of Riksbank Apr 25 Monetary Policy Meeting - Text

     LONDON (MNI) - The Riksbank decided to keep rates unchanged at -0.50%

following the Apr 25 2018 meeting. The minutes of the meet, released Feb 23

2018, follow:

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Minutes of the Monetary Policy Meeting held on 25 April 2018 At the Monetary

Policy Meeting on 25 April 2018, the Executive Board of the Riksbank decided to

hold the repo rate unchanged at -0.50 per cent. The forecast for the repo rate

has been revised down since the monetary policy meeting in February and

indicates that slow increases in the repo rate will not be initiated until

towards the end of the year.

     A majority of the Executive Board supported the picture of the economic

outlook and inflation prospects described in the draft Monetary Policy Report.

This picture has remained largely unchanged since February. Economic activity

abroad continues to strengthen, but inflation is rising moderately. In Sweden,

the economic situation is strong and inflation has been close to the target over

the past year.

     One of the reasons why CPIF inflation is close to 2 per cent is a rapid

increase in energy prices. Underlying inflation has been unexpectedly weak so

far this year and, as at the February meeting, the forecast for inflation

measured in terms of the CPIF excluding energy has been adjusted downwards.

Several members expressed concern about the development of inflation going

forward and it was noted that a prerequisite for CPIF inflation to stabilise

close to 2 per cent is that monetary policy remains expansionary. It has taken a

long time to bring inflation and inflation expectations back to 2 per cent and

several members stressed the importance of vigilance and caution in monetary

policy. In light of the uncertainty surrounding the strength of inflationary

pressures, the majority concluded that it is reasonable to now wait slightly

longer before it is time to start raising the repo rate than according to the

assessment made at the monetary policy meeting in February. The forecast for the

repo rate indicates that rate rises will be initiated towards the end of the

year.

     Slight differences of opinion were expressed as regards when it might be

appropriate to raise the repo rate. One member did not wish to rule out the

possibility of it happening in September while another thought that it may be

necessary to further postpone the first increase, compared with the forecast for

the repo rate.

     The members discussed the development of the exchange rate; what might be

behind the large movements that have occurred since the last meeting and in what

way this is expected to affect inflation. Several members pointed out that it is

important that the krona exchange rate develops in a manner compatible with

inflation stabilising close to the target.

     Several members also underlined the importance of inflation expectations

continuing to be in line with the inflation target.

     There was also a discussion about distributional effects and whether

monetary policy can and should take redistribution policy into consideration.

     One member entered a reservation against the decision to hold the repo rate

unchanged and against the repo rate path in the draft Monetary Policy Report. He

advocated raising the repo rate to -0.25 per cent with reference to the strong

economic growth in Sweden and abroad.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com