Riksbank doves defeated on rate cuts despite broad support for easing, minutes show

Minutes reveal that despite unanimous support for ‘more expansionary’ monetary policy, majority of board members voted to hold rates due to household debt fears
larssvensson
Lars Svensson

Board members disagreed over the danger posed by high household debt in Sweden, ultimately voting to keep rates on hold, according to the minutes of the Riksbank's latest monetary policy meeting, published today.

The minutes showed that Lars Svensson and Karolina Ekholm, who backed cuts of 50 basis points and 25bp respectively, were defeated in the final vote by the four other members, who raised concerns that high debt could worsen Sweden's already high unemployment, even though they "agreed that monetary policy needs to be more expansionary".

Svensson argued that it was "not at all self-evident" that high household debt was causing problems. He said houses could be overvalued, lending standards inadequate or banks and borrowers had insufficient resilience.

Svensson presented his own analysis that suggested Sweden's low inflation gave the central bank plenty of room to cut rates, although Marianne Nessén, head of the monetary policy department, emphasised that Svensson's calculations "had not been quality assured" by her department.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@centralbanking.com or view our subscription options here: http://subscriptions.centralbanking.com/subscribe

You are currently unable to copy this content. Please contact info@centralbanking.com to find out more.

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account

.