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Monetary Policy Update: Repo Rate Increases Postponed Amid Market Turbulence

In September 2011, the central bank decided to postpone increases to the repo rate due to significant turbulence in financial markets. Key economic indicators show major concerns, including declining public finances and increasing public debt as a percentage of GDP. The global economic growth remains steady, but confidence indicators from Swedish households and businesses reflect caution. Although Sweden is experiencing slower short-term growth, there are signs of labor market improvement, with low inflationary pressures and wage increases aligned with inflation targets.

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Monetary Policy Update: Repo Rate Increases Postponed Amid Market Turbulence

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  1. Monetary PolicyUpdateSeptember 2011

  2. Repo-rate increases postponed

  3. Turbulence in the financial markets Stock market index, 3 January 2006 = 100 Source: Reuters EcoWin

  4. Major problems with public finances Public debt as percentage of GDP Source: IMF WEO April 2011

  5. Declining confidence abroad Purchasing managers’ index, manufacturing industry, seasonally-adjusted data Source: Markit Economics

  6. Global growth holding up GDP, annualpercentagechange Sources: Bureau of Economic Analysis, Eurostat and the Riksbank

  7. Cautious Swedish households and companies Confidence indicators for households and the total business sector, net figures, seasonally-adjusted data Source: NIER

  8. Slower Swedish growth in the short term GDP, quarterly percentage change as an annual rate, seasonally-adjusted data Sources: Statistics Sweden and the Riksbank

  9. Slow improvement in the labour market Unemployment, percentage of labour force, seasonally-adjusted data Sources: Statistics Sweden and the Riksbank

  10. Wage increases compatible with the inflation target Nominal wages, annual percentage change Sources: National Mediation Office, Statistics Sweden and the Riksbank

  11. Low inflationary pressures Annual percentage change Sources: Statistics Sweden and the Riksbank

  12. Lower repo-rate path Repo rate, per cent, quarterly mean values Source: The Riksbank

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

  14. Repo-rate increases postponed

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