Committee on Finance hearing on the Riksbank's operations and monetary policy

Governor Erik Thedéen began the hearing by summarising the past year and noted that a great deal has happened at the Riksbank and abroad that has had an impact on operations.

“2023 was characterised by high inflation, which had a very negative impact on households and companies. Our focus has been to bring inflation down within a reasonable period of time. We have also needed to respond to the deteriorating geopolitical and security situation and we have come a long way with our new task of ensuring that payments will function during peacetime crisis situations and in a state of heightened alert. We have also implemented a number of measures to reduce the risk on the Riksbank’s balance sheet.”

The second part of the hearing focused on current monetary policy. Mr Thedéen began by summarising the Executive Board's latest monetary policy decision in February.

“Inflation has fallen in recent months and is on firmer ground. Our assessment is therefore that the interest rate appears to have peaked. If the prospects for inflation remain favourable, we cannot rule out the possibility of the policy rate being cut during the first half of the year. Our next monetary policy meeting is in three weeks’ time. Prior to that, we will weigh up all the new information and make a new assessment of what monetary policy is appropriate to achieve low and stable inflation in Sweden.” 

Deputy Governor Per Jansson then took over and commented on the uncertainty surrounding inflation.

“We are well on the way to bringing inflation down and the risk of high inflation becoming entrenched has diminished. Inflation trends and price indicators are developing favourably, both in Sweden and abroad. Activity in the Swedish economy suggests limited upside risks to inflation from the demand side. In addition, confidence in the inflation target is strong. But of course, we cannot rule out setbacks. These may stem from heightened geopolitical tensions, a weaker exchange rate or a delay in the normalisation of firms' pricing behaviour. In a bad scenario where these risks materialise simultaneously, the impact on inflation could be significant. Against this background, monetary policy needs to be conducted with caution, with each step carefully scrutinised and considered.”