1. The Riksbank and monetary policy
Barbro Wickman-Parak, 14 August 2007

2. On the agenda: Interest rate decision in June
Brief description of events over the summer
Market reactions after the interest rate decision

3. Monetary policy meeting in June
Decision to raise the repo rate from 3.25 to 3.50 per cent
New (higher) interest rate path presented

4. The new interest rate path Per cent, quarterly average
Note. The broken line refers to the Riksbank’s forecast.
Source: The Riksbank

5. Resource utilisation has risen and is continuing upwards Percentage deviation from HP-trend
GDP
Hours worked
Employment
Sources: Statistics Sweden and the Riksbank

6. Costs are rising Annual percentage change, seasonally-adjusted data
Unit labour cost
Labour cost per hour
Productivity
Sources: Statistics Sweden and the Riksbank
Note. Broken line and bars refer to the Riksbank’s forecasts.

7. Sources: Statistics Sweden and the Riksbank
Household purchasing power boosted by tax cuts Annual percentage change and per cent
Disposable income
Contribution from households’ direct taxes
Sources: Statistics Sweden and the Riksbank

8. Sources: Statistics Sweden and the Riksbank
Labour market has tightened Thousands of people and percentage of labour force
Employed (left scale)
Labour force (left scale)
Number of unemployed (right scale)
Sources: Statistics Sweden and the Riksbank

9. Labour shortages have increased Per cent, seasonally-adjusted data
Manufacturing
Three service sectors
Construction
Trade
Note. Three Service sectors consist of haulage contractors, computer consultants and consultancy work
Source: National Institute of Economic Research

10. Signs of aggravated shortages must be closely monitored
Risk of higher wage increases or…
…risk that employers will lower standards regarding qualifications which will lead to lower productivity
In both cases and cost and inflationary pressures intensify

11. US housing market under focus in the financial markets
Risk premiums have risen on the whole
Individual institutions have been affected

12. National Accounts figures Q2
Growth in Q2 was marginally higher than forecast by the Riksbank in June
Employment measured as the number of hours worked was stronger than expected
Productivity growth weaker than expected

13. Productivity Annual percentage change
PPR 2007:2
Preliminary outcome Q2, 2007
HP-trend, according to PPR 2007:2
Sources: Statistics Sweden and the Riksbank

14. Inflation Annual percentage change
UND1X
UND1X excl. energy
Note. The broken line refers to the Riksbank’s forecast, PPR 2007:2
Sources: Statistics Sweden and the Riksbank

15. Interest rate expectations 19 and 20 June

16. Interest rate path; some reflections
Positive that the Riksbank is presenting its own view of the repo rate
Market unused to reacting to the interest rate path
Joint learning process