Figure 5 shows the Riksbank's and other central banks' forecasting errors (outcome minus forecast) for each country's inflation target variable for 2022. Here we can see when the Riksbank adjusted its forecasts compared to other central banks. In other words, the figure shows when the largest forecasting errors were made. Figure 6 shows the corresponding forecasting errors standardised by the range of variation in the same way as in Figure 4 above. As the forecasting errors for the Czech Republic and Poland were relatively large, we have excluded them in Figure 5 to make it easier to study the Riksbank's forecasting errors.

Figure 5. The Riksbank's and other central banks' forecasting errors (outcome minus forecast) for each country's inflation target variable for 2022 Percentage points

The range of variation in forecasting errors for 2022 confirms the conclusions from Figures 3 and 4. Figure 5 shows that the forecasting errors of the Riksbank, the European Central Bank and the Bank of England are generally higher than those of other central banks (if Poland and the Czech Republic are excluded). This is the same picture as painted in Figure 3. At the beginning of 2022, the forecasts for all central banks are adjusted upwards and the forecasting errors are noticeably reduced. The fact that inflation was about to really take off was thus not clear to any of the central banks we are studying until the end of 2021 or early in 2022. We note that the Reserve Bank of New Zealand’s (RBNZ) forecasting errors in 2020 were in line with those of the Riksbank. In 2021 and 2022, the forecasting errors for the RBNZ clearly decreased. In November 2021, the RBNZ revised its forecast for inflation in 2022 upwards by almost two percentage points compared with the August forecast. However, inflation had also risen sharply between the second and third quarters. Both the consumer price index (CPI) and the CPI excluding certain foods and energy rose by 1.5 percentage points between the quarters. The situation was different in Sweden. CPIF inflation rose by only 0.25 percentage points and the CPIF excluding energy fell by 0.1 percentage points between the second and third quarters of 2021. Inflation thus rose earlier in New Zealand than in Sweden, which is a possible explanation for the RBNZ raising its forecasts earlier than the Riksbank.

Figure 6. The Riksbank's and other central banks' normalised forecasting errors (outcome minus forecast) for each country's inflation target variable for 2022

However, it can be noted that the forecasting errors for inflation in 2022 made by the Riksbank in November 2021 and February 2022 are generally at the upper end of central bank forecasting errors. In other words, the Riksbank forecast lower inflation in relation to the outcome for 2022 than other central banks did. This is true even if one takes into account that the range of variation in the CPIF is relatively high (see Figure 6).^[15] The inflation forecast was analysed in detail in the February 2022 Monetary Policy Report. The minutes of the Executive Board meeting noted that inflation had risen rapidly over the past year worldwide. The Board members emphasised that this was largely due to a surprisingly rapid rise in energy prices. They also emphasised that there was considerable disparity between different countries regarding measures of inflation that exclude energy prices. Compared with the United States, for example, where even inflation excluding energy had risen substantially, it was pointed out that Swedish inflationary pressures were still moderate. Several members pointed out that different measures of underlying inflation in Sweden were unusually volatile, and therefore gave no clear picture of the longer-term trend in price growth. The members noted that until the end of February 2022 there did not appear to be a broad pick-up in inflationary pressures.

The conclusion in Hassler, Krusell and Seim (2023), that the Riksbank should have increased its preparedness when inflation in the United States began to rise in December 2020 and when the Bank of England began to raise its policy rate in December 2021, is thus a relevant criticism if one looks only at these two forecast dates. If the Riksbank had taken into account the rapid rise in inflation in other countries and allowed it to affect the CPIF forecast in that direction at the end of 2021 and the beginning of 2022, the forecasting error for these two forecast dates would probably have been lower.

Overall, however, the Riksbank's forecasts do not appear to be worse than those of other central banks. So, overall, we see a dead heat with no clear winner in the 2022 forecasts – taking into account that inflation varied widely across countries between 2013 and 2022. Nevertheless, one can agree that the forecasts could have been better on some occasions, if the Riksbank had taken greater account of inflation developments abroad and of other central banks' inflation forecasts, which was also noted in the Riksbank's Account of monetary policy 2022.^[16] See Account of monetary policy 2022, Sveriges Riksbank, 2023.