Riksbankens Penningpolitik - En undersökning om sambandet mellan Inflation och Reporänta
The Riksbank’s monetary policy - An investigation about the relationship between inflation and repo rate.
Since the financial crisis 2008 Riksbanken have tried to stimulate the economy by using expansive monetary policy and QE programs with the purpose to increase CPI back to 2 percent a year. As a result, the repo rate has fallen from around 4,5 percent to -0,5 percent but Sweden is still struggling with a CPI below target. Therefore, the aim of this report is to investigate if the relationship between repo rate and CPI in Sweden has changed before and after the financial crisis 2008. The investigation is made mainly through regression analysis between CPI and repo rate, but there are two other regressions included in the report, to create a more comprehensive discussion. The result points out clear differences between the periods before and after the financial crisis. The relationship between CPI and repo rate is in line with theory during the period before the financial crisis. After the financial crisis until today the relationship deviates from theory. Globalisation and digitalisation are discussed as main reasons to why the result deviates from theory.