Riksbank Minutes: Market expectations regarding central bank policy rates have been closely interlinked with the inflation risks stemming from energy prices

Thedéen

• “The likely outcome will be weaker growth and higher inflation, but it is currently very difficult to quantify these effects.”
• “I now judge that the risks of higher inflation in the period ahead have increased as a result of developments in the Middle East.”
• “The longer the supply shocks persist, the more likely is a scenario in which the policy rate will need to be raised.”
• “The likelihood of the scenario involving reduced policy rates described at our last meeting is now quite low.”
• “We will act decisively if circumstances so require.”

Jansson

• “I continue to judge that a wait-and-see approach is for now the best strategy for monetary policy.”
• “I still have not given up hope that the impact might be relatively limited, especially here in Sweden.”
• “The more favourable inflation situation we currently see could, in an adverse scenario, soon be a thing of the past.”
• “My view, therefore, is that the jury is still out.”

Bunge

• “There is scope to wait a little longer to gain a clearer picture of the effects of supply disruptions caused by the war before we adjust monetary policy.”
• “Upside risks to inflation have increased somewhat precisely because no resolution to the conflict has yet emerged.”
• “I believe there is little to gain by responding pre-emptively to the supply shocks we are currently observing.”
• “I therefore consider it appropriate to leave the policy rate unchanged at this meeting and not to signal any change in the monetary policy stance, while at the same time being prepared to act if necessary.”

Hjelm

• “I do not rule out the possibility that monetary policy may need to be tightened going forward owing to the risk of inflation becoming too high, even if supply-driven.”
• “Should my assessment of the extent of the shocks change and there be a risk of a broad and more protracted rise in inflation, monetary policy should be tightened.”
• “The cost will be even greater if the Riksbank needs to raise interest rates sharply at a later stage in order to restore confidence in the inflation target.”

Seim

• “Every day that passes without a lasting solution to the war in the Middle East increases the risk that the war will have more far-reaching effects on the Swedish economy.”
• “Although I see significant upside risks to inflation going forward… I am not advocating an increase in the policy rate at today’s meeting.”
• “It is possible that we will feel more certain about in which direction the economy is heading and my view is that this could be sufficient to justify a change in the policy rate.”