Ingves and Jansson in Riksdag Committee on Finance: We are safeguarding the inflation target

News The high inflation creates problems. It erodes purchasing power – especially for the least well-off – and makes it difficult for both households and businesses to plan their finances. Therefore, the Riksbank, which has been given the task by the Riksdag of keeping inflation low and stable, must now act to bring inflation down. Low and stable inflation provides a foundation for good economic development. This was the message from Governor Stefan Ingves and Deputy Governor Per Jansson when they took part in a hearing on current monetary policy at the Riksdag Committee on Finance.

Inflation is too high – monetary policy has to act

At the end of last year, inflation excluding energy prices was still low. But over the course of the year, inflation has spread widely in the economy. “Today, almost all prices are rising in Sweden, and rising fast,” said Stefan Ingves. To dampen the high inflation, the Riksbank has raised its policy rate three times this year and the Executive Board's forecast is that it will need to be raised further in the next six months.

"Inflation is far too high, and we must therefore use our monetary policy. A higher policy rate slows down economic activity. If we do not act now, it could lead to even more severe and negative effects later on. The inflation-targeting policy is now being put to the test,” said Stefan Ingves. 

At the same time, he pointed to the considerable uncertainty in the Riksbank's forecasts and mentioned in this context the high price of electricity, the geopolitical situation and the interaction between fiscal and monetary policy in various parts of the world. "If the conditions change, we need to adjust monetary policy accordingly. We will do what is necessary to bring inflation back to the target.”

The inflation target is worth defending

The same message was instilled by Per Jansson: “We will bring inflation down to the target level - and this is a promise, not a forecast.” However, he emphasized that there are better and worse paths to get there. “The best scenario would be if we can return inflation to the target with relatively cautious rate increases. This is also contained in our forecast, where the policy rate peaks at 2.5 per cent. But a lot also depends on the support for this development in price-setting and wage formation and the formulation of fiscal policy."

The inflation target has contributed to a good economic development in Sweden, he continued and pointed out, among other things, that real wages have increased more than three times faster per year since the inflation target was introduced in 1995, compared with the period 1970-1994. “The inflation target is worth defending, and I hope that we will cooperate to do so.”

Contact: Press Office, tel. +46 8-7870200
Updated 20/10/2022