Riksbank deputy seeks ‘less expansionary’ path

Irma Rosenberg, deputy governor of the Riksbank, Sweden's central bank, said in a speech today that the strong level of economic activity in conjunction with current inflation forecasts indicate that it will again be necessary to gradually shift monetary policy onto a less expansionary path to ensure that inflation remains close to target.

She reiterated that there is reason to assume gradually increasing inflationary pressures as the economic upswing leads to a rise in capacity utilisation both in Sweden and abroad.

“In February, when we chose to raise the repo rate, our conclusion was that the interest rate should perhaps be increased at a somewhat slower rate than was anticipated according to the interest rate path on which the forecasts in the Inflation Report were based.

“Personally, I do not see any reason in the current situation to change that assessment, although international developments now look slightly better than we had anticipated in February,” Rosenberg said.

She said that her overall conclusion is that the new information received since the Inflation Report in February mainly confirms the picture then outlined of economic activity in Sweden (relatively high GDP growth in the coming years), while it indicates a slightly stronger development abroad.