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REPEAT: Riksbank - Some Difference Of Opinion On QE Extension
Repeats Story Initially Transmitted at 09:37 GMT Nov 9/04:37 EST Nov 9
--December Meeting in Focus; Maintain Wait-And-See Stance
By Kieran Williams
LONDON (MNI) - There was a difference of opinion amongst Riksbank Executive
Board Members at the October 25 meeting over whether the purchase of government
bonds should continue beyond the end of 2017, according to the latest Riksbank
minutes published Thursday.
The minutes showed that "all of the members noted that a continued expansionary
monetary policy was needed for inflation to remain close to 2 per cent going
forward," but also cited "slight differences of opinion" over the extension of
QE.
Deputy Governor Martin Floden said that "he does not expect to advocate an
extension to the programme at the meeting in December," according to the minutes
citing benign conditions and rising inflation expectations. This view was
supported by Cecilia Skingsley.
A dovish turn was taken by Riksbank Governor Stefan Ingves who said that the
board should "await further information that may influence a decision in
December to possibly extend purchases," a view that was shared by Kerstin af
Jochnick.
Inflation remains a key focus for the Riksbank. "In Sweden, economic activity is
strong. CPIF inflation has risen and, like inflation expectations, is close to 2
per cent. However, part of the recent upturn in inflation is explained by
temporary factors and inflation is therefore expected to fall back somewhat in
the coming months," the minutes showed.
The September CPIF print at 1.9% was 0.3ppts lower than the Bank's forecast, as
a result the Bank note that they have revised lower the forecast for inflation
in the coming months. Several board members did note though that lower inflation
and strong economic activity had caused some appreciation in the krona which
should exert some upward pressure on inflation.
With this in mind the board extended the mandate for quick intervention on the
foreign exchange market. Floden and Henry Ohlsson did not support this decision
saying respectively that the impact of FX intervention was dubious and that
intervention was not necessary.
The minutes bring the December meeting into focus for the future of the QE
programme. According to the minutes all members "agreed that there is time to
await further information that may be important for a decision on a possible
extension at the December meeting."
The first rate increase is still expected to come in mid-2018, maintaining the
assessment from the September meeting.
The minutes confirm the wait-and-see stance that was evident in the Monetary
Policy Report on October 26. The minutes stated that "the Executive Board agreed
on the picture of economic development and the inflation outlook described in
the draft Monetary Policy Report."
--MNI London Bureau; +44 203 865 3809; email: kieran.williams@marketnews.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.