Cecilia Skingsley: High inflation and a rising repo rate – what happens to the Riksbank's balance sheet?

Speech by Ms Cecilia Skingsley, First Deputy Governor of the Sveriges Riksbank, at the Handelsbanken Stockholm, Stockholm, 6 May 2022.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Accompanying slides can be found on the Sveriges Riksbank's website. 

As you know, inflation in Sweden is now at the highest levels in several decades. We have entered a period in which the repo rate needs to be raised – and much more than we expected earlier.

'The inflation map has been redrawn', and this is a situation we share with many other central banks worldwide. However, as you also know, the Riksbank implemented strong monetary policy measures during the coronavirus crisis, where an important element was asset purchases. The question then arises: Now that we are starting to raise interest rates – what happens to the assets on our balance sheet?

When I answer that question, I would first like to go back in time a little and explain how the assets originally got there.