Anna Breman in Falkenberg: Inflation needs to become low and stable again
News, Speeches High inflation affects everyone. But the higher inflation is, the greater the differences are between households. A typical family with children currently faces inflation of around 17 per cent, compared to the average of around 12 per cent, measured as the CPI. Low and stable inflation benefits everyone and reduces the differences between households." This is what First Deputy Governor Anna Breman said today when she spoke about inflation and the Riksbank's latest interest rate decision at Näringslivsdagen (Industry and Trade Day) in Falkenberg.
"Inflation is now far too high and still shows no clear signs of abating. Monetary policy therefore needs to be substantially tightened for a significant period in order for inflation not only to come down to two percent but also to thereafter remain at a low and stable level," Anna Breman said.
When inflation falls back to a low and stable level, we also contribute to favourable f conditions for economic growth a strong labour market and rising living standards.
Inflation was mainly caused by two global crises: the pandemic and Russia's invasion of Ukraine. However, the price increases have spread broadly to all categories, including to service prices which are heavily influenced by domestic factors. Monetary policy cannot influence energy prices, but it can prevent inflation from becoming entrenched at high levels and causing a price and wage spiral. Demand slows down, making it more difficult for companies to continue raising prices.
“The Riksbank's interest rate hikes last year have begun to have a significant effect on the Swedish economy, which will result in lower inflation later during the year. But the forecasts are uncertain. What incoming data say about inflation developments will therefore be crucial for the design of monetary policy in the future. It is important that inflation expectations remain well anchored and that the decline in energy prices is also followed by a reduction in the rate of price increases in other price categories, such as services, food and goods prices," Anna Breman said.
