Martin Flodén: Inflation is still far too high
News “Inflation is far too high and the inflation outcome for February was not at all good.” These comments were made by Deputy Governor Martin Flodén, speaking about the economic situation today at Barclays in Stockholm.
Inflation and rising interest costs are cooling down activity in the Swedish economy. Consumption, housing prices and construction have declined. “The global economy has so far proved to be relatively resilient to rising prices and interest rates. But it is clear that interest rate increases are now starting to make their mark in other countries, too” said Mr Flodén and mentioned the ongoing banking problems in the United States and Switzerland. “We know that Swedish households and companies are sensitive to interest rates. In some other economies, it is not as clear where interest rate risks lie.”
Swedish inflation has continued to rise. “We had expected to begin to see signs of a turnaround in underlying inflation now. Instead, it has moved in the wrong direction,” said Mr Flodén. “I nevertheless think there is good hope that the price increases will be curbed and that inflation will fall quickly later this year. Energy prices have come down and international freight and commodity prices have begun to fall. Despite underlying inflation remaining far too high, CPIF inflation has developed in line with our forecast.”
“But we are in a difficult and uncertain situation,” he continued. “The recent inflation outcomes and the problems associated with some international banks add to that uncertainty. Prior to our next monetary policy meeting at the end of April we will receive further information that may affect the prospects for inflation and the shaping of monetary policy. We will return to exactly what this means in terms of interest rate increases and monetary policy in our decision at the end of April. But we will do what is necessary to restore inflation to a low and stable level within a reasonable time.”