MNI: Minutes of Riksbank Jul 3 Monetary Policy Meeting - Text

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

following the Dec 19 2017 meeting. The minutes of the meet, released Jan 10

2018, follow:

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Minutes of the Monetary Policy Meeting held on 19 December 2017 At the Monetary

Policy Meeting on 19 December 2017, the Executive Board of the Riksbank decided

to hold the repo rate unchanged at -0.50 per cent. It is expected that rate

rises will begin at a slow pace in mid-2018, which is the same assessment as

made at the meeting in October. The Executive Board has also decided to begin

reinvestment of the bonds that mature in 2019 during January 2018.

     The Executive Board noted that the Riksbank's overall assessment of the

economic outlook and inflation prospects in the years ahead remains the same as

in the forecast in October.

     Economic activity abroad is increasingly strong but global inflationary

pressures are subdued and the normalisation of monetary policy abroad is

expected to proceed slowly. In Sweden, economic activity is still strong and

resource utilisation is higher than normal. CPIF inflation is close to 2 per

cent, as are inflation expectations.

     Several board members noted that although CPIF inflation is 2 per cent, it

has taken time and required a great deal of support from monetary policy to

achieve this. In order for inflation to remain close to 2 per cent going

forward, monetary policy needs to continue to be expansionary. It is therefore

too early to change the direction of monetary policy.

     The Executive Board unanimously agreed to leave the repo rate unchanged at

-0.50 per cent, with some slight differences in opinion regarding the

appropriate time to initiate slow rate rises. Views also differed as regards the

need to bring forward reinvestments of maturing government bonds. Large

maturities, amounting to a good SEK 50 billion, will occur during the first half

of 2019. In addition, there are coupon payments of a total of around SEK 15

billion from January 2018 to June 2019. A majority of the Executive Board

considers it appropriate to initiate reinvestments of these maturities and

coupon payments as early as January 2018 and to allow them to continue until the

middle of 2019. This means that the Riksbank's holdings of government bonds will

increase temporarily in 2018 and the beginning of 2019. Two members instead

considered it more appropriate to wait and decide at a later stage whether, and

if so how, redemptions during 2019 shall be reinvested.

     Several members discussed aspects of the normalisation of monetary policy

and how much monetary policy room for manoeuvre the Riksbank has in relation to

central banks abroad. In this context, it was pointed out that the development

of the exchange rate is particularly important.

     Developments on the Swedish housing market were also discussed. The

increase in housing supply and slowdown in housing prices are welcome

developments. Although there are risks associated with the developments on the

housing market, it was also noted that the strong economic activity in Sweden

and abroad indicates only a rather moderate fall in housing prices.

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