Per Jansson: Responsible wage formation benefits the Swedish economy

“Thanks to the great responsibility taken by the social partners in wage formation, Sweden appears to have less of a problem than some other countries in bringing down inflation 'the last mile'.” These comments were made by Deputy Governor Per Jansson, when he spoke today at the Swedish Unions within Industry about the economic situation.

Date: 11/04/2024 13:15

Speaker: Deputy Governor Per Jansson

Place: Aronsborgs Konferenshotell - Bålsta

Per Jansson, Deputy Governor.

Per Jansson, Deputy Governor.

“My view at the last monetary policy meeting in March was that the development of inflation looked so favourable that it might have been possible to cut the interest rate even at that stage. However, the journey towards sustainably low and stable inflation must continue, and a further reduction in inflation in the run-up to our May meeting, preferably thanks to lower growth rates for services prices, would of course be welcome. The important thing, however, is that the development of inflation does not deteriorate. And if that does not happen, as I see it, the threat to being able cutting the interest rate in May will instead come mainly from the postponement of the rate-cutting plans of other central banks. This risks weakening the krona, which in turn could push up inflation again going forward, in the worst case scenario in a serious way," said Jansson.

“When we start talking about cutting the policy rate in the coming years, it will be important to monitor how demand in the economy reacts to these signals. However, a monetary policy characterised by prudence, with gradual reductions in the policy rate, should reduce the risk of a too large and rapid increase in demand.”

Mr Jansson also emphasised that the Swedish wage formation model provides an advantage in the fight against inflation compared with many other countries.

“Thanks in part to the Swedish wage model, we don't seem to have the same problems bringing down inflation 'the last mile' as in some other parts of the world. This favours real wages, which are well placed to rise again. It has also contributed to the more favourable development in employment in Sweden than in many other countries. It pays to take responsibility.”

Updated 11/04/2024