The Riksbank raised the repo rate as expected by 25 basis points to
3.25%, which comes into force from Wednesday. The exciting thing is what
is in the Monetary Policy Report, where the Riksbank will present their
beliefs about what it itself will bring the repo rate.
Riksbank think they continue to raise the rate another 25 basis points over the next six months. Then think they hold off interest rate rise in the spring of 2008, when it will be another 25 basis points, to then stay at that level for some years. This is a surprise to the bond market, who believed that the repo rate would fall at least 3.75% in late 2007 and to about 4.25% in 2008. As the market believed in higher interest rates before the announcement, fell immediately market by over 10 points. How to surprise the market in this way is not always so successful because it creates anxiety and may mean that some players are losing money. Personally I think the Riksbank, which is usually very adept at communicating their message across, could have prepared the market better in this statement. One reason why the Riksbank does not consider that it will require the same amount increases as the market expected, is the increased labor supply. This means that they think it will be more people looking for work and thus join the workforce, instead of not registering as unemployed or tex. study. When more people joining the workforce employers need not offer the same high wages to attract labor, because there are more workers to choose from. Thus pressed not inflation up, even though growth is high and many others find jobs. But what good that we may know the Riksbank's think about what it will do ourselves! They ought to know themselves what they should do! Now we know well exactly how the interest will be added in the coming years??? No, no no ... we do not know at all. For example, in not so many people joining the workforce, the Riksbank think, or if the rest of the world economy hit by higher inflation, or if the unions succeed in negotiating wages up more than expected, so the interest rate will be raised more quickly. So look out, the excitement continues! by Anna Lind in blog.ikanobank.se - https://www.affordablecebu.com/
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"And so the Riksbank raised the repo rate ..." was written by Mary under the Banking category. It has been read 2160 times and generated 1 comments. The article was created on 17 March 2011 and updated on 17 March 2011.
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