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September 2012 Monetary Policy Update: Repo Rate Cut to Combat Low Inflation

In September 2012, the Riksbank cut the repo rate to counteract anticipated low inflation and address ongoing unease in financial markets. This adjustment aims to stabilize the Swedish economy amid weak growth trends, particularly in the euro area. Despite these challenges, the Swedish economy remains relatively strong with good productivity growth. However, lower inflationary pressure is expected in the coming period, reflecting a complex interplay of domestic and international economic factors. The repo rate adjustments are crucial in guiding future monetary policy.

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September 2012 Monetary Policy Update: Repo Rate Cut to Combat Low Inflation

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  1. Monetary Policy UpdateSeptember 2012

  2. Repo rate cut Counteracts low inflation ahead

  3. Continued unease on financial markets   Source: Reuters EcoWin Government bond rates with 10 years left to maturity, per cent

  4. Structural problems in Europe Unitlabourcost Index, 1999 = 100 Source: OECD

  5. Weak developments in euro area GDP, annualpercentagechange Sources: Bureau ofEconomicAnalysis, Eurostat and the Riksbank

  6. Swedish economy relatively strong GDP, quarterly changes in per cent calculated as an annual rate, seasonally adjusted data Sources: Statistics Sweden and the Riksbank

  7. Growth dampened in coming period Source: National InstituteofEconomic Research Index, average = 100, standard deviation = 10

  8. Stronger krona Source: The Riksbank Competition-weighted nominal exchange rate, TCW, Index, 18 Nov 1992 = 100

  9. Labour market in line with expectations Per cent of the labour force, aged 15-74, quarterly data, seasonallyadjusted data Sources: Statistics Sweden and the Riksbank

  10. Lower inflationary pressure • Weakgrowth in the coming period • Goodproductivitygrowth • Stronger krona

  11. Lower repo rate Repo rate, per cent, quarterly averages Source: The Riksbank

  12. Inflation rising towards the target Sources: Statistics Sweden and the Riksbank Annualpercentagechange. The CPIF is the CPI with a fixedmortgage rate

  13. A forecast, not a promise Repo rate, per cent, quarterly averages Source: The Riksbank

  14. Repo rate cut Counteracts low inflation ahead

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