Ingves at Riksdag Committee on Finance: The geopolitical uncertainty makes it more difficult to assess inflation

The Riksbank is closely following developments and is prepared to deal with possible effects on the financial markets as a result of Russia's invasion of Ukraine. “We are continually evaluating the consequences for the Swedish economy,” said Governor Stefan Ingves in his introduction on monetary policy, when he and Deputy Governor Anna Breman took part in the first hearing of the year at the Riksdag Committee on Finance.

Date: 03/03/2022 10:00

Speaker: Governor Stefan Ingves

"Back when we presented our assessment of inflation prospects in our latest Monetary Policy Report on 10 February, we said that inflation was uncertain. Recent developments in Ukraine further reinforce that impression,” said Mr Ingves. At the moment, inflation in Sweden is higher than the target, but according to the Riksbank's latest forecast from February, it is expected to fall back over the year. For inflation to be close to the target a little further ahead requires continued support from monetary policy. "But we are continually assessing how the Swedish economy is developing and how sustainable the higher inflation is and we will adjust our monetary policy if necessary," said Mr Ingves.

Ms Breman also stressed the need to follow developments in financial markets and in the Swedish and global economies. The direct effects on the Swedish economy are expected to be small, as Sweden's trade with Ukraine and Russia is limited and Swedish banks have little exposure to these countries. However, the consequences can be more tangible if the war escalates, or causes greater unrest in financial markets. The prices of energy and intermediate goods increased sharply even before Russia's invasion of Ukraine, and many companies may need to raise prices in the light of the fact that energy prices are now rising further. "The war will affect economic and inflation prospects in Sweden, as well as abroad. We need to be prepared to adjust monetary policy if necessary,” said Ms Breman.

Updated 03/03/2022