Chief of Sweden’s finance watchdog appointed next Riksbank governor

Stefan Ingves, the central bank governor who helped steer Sweden through the 2007 financial crisis, and then presided over years of negative interest rates, is to step at the end of the years.

Chief of Sweden's finance watchdog appointed next Riksbank governor
Erik Thedéen, the next governor of Sweden's Riksbank, holds a press conference following his appointment. Photo: Pontus Lundahl/TT

Ingves, who has spent 17 years as Governor of the Riksbank since taking up the post in 2006, will leave the bank when his term expires at the end of this year, to be replaced by Erik Thedéen, who currently leads Sweden’s Financial Supervisory Authority. 

“These years have been eventful and stimulating and it has been a great honour to head up the Riksbank’s work, together with… all of the knowledgeable and dedicated employees at the bank,” Ingves said in a statement.

“I have had the privilege of working with the best, both in Sweden and around the world, and I have been involved in making the Riksbank into an institution ranked as one of the best central banks in the world. This has been a source of great joy.” 

At a press conferene, Thedéen said he was “proud and humbled” to have been chosen as the bank’s next governor, and said he had accepted the offer immediately. 

“That’s because this is, I believe, and extremely exciting job, an important job, and a job that comes with great responsibility.” 

Thedéen has been given a six-year appointment to the position.

Alexandra Stråberg, chief economist at Sweden’s Länsförsäkringar insurance group, expressed her surprise that a woman had not been chosen for the first time since the Riksbank was founded in 1929. 

“Erik in an insider in the world of Swedish government agencies and has to be seen as a conservative choice,” she said.

Robert Bergqvist, chief economist at SEB, said it would be “interesting to see” if Thedéen would be a hawk or a dove in monetary policy, but said that the return of inflation as a threat was anyway changing the approaches of central bankers worldwide. 

Torbjörn Isaksson, an economist at Nordea, predicted that Thedéen might bring a tougher approach towards controlling inflation. 

Susanne Eberstein, the chair of the Riksbank’s board, and the vice chair Michael Lundholm praised Ingves for what he had done in his time. 

“Under Stefan Ingves’s leadership the Riksbank has taken big, innovative steps, among them being the development of the e-krona,” she said. “His engagement in communicating the role of the central bank, its goals and decisions has helped make the Riksbank more transparent and accessible.”  

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Inflation rate dips in Sweden for first time in seven months

The inflation rate in Sweden fell in July for the first time in seven months, according to official data from Statistics Sweden (SCB), indicating that rate rises may be having an impact on rising prices.

Inflation rate dips in Sweden for first time in seven months

“Lower prices for electricity and fuel contributed to the inflation rate sinking for the first time since January,” said Carl Mårtensson, a price statistician at the agency, in a press release.

The official inflation rate for July this year was 8 percent, down from 8.5 percent in June, and below the consensus estimate of economists at 8.3 percent.

The fall was almost exclusively the result of falling prices for electricity and fuel, with the price of electricity falling by 8.3 percent month on month and the price of petrol and diesel falling 5.6 percent. Excluding energy prices, the inflation rate rose to 6.6 percent from 6.1 percent in June. 

Olle Holmgren, Chief Strategist at Sweden’s SEB Bank said that while inflation pressure remained high, the numbers were cause for hope. 

“Inflation pressures remains high, but the composition of price changes gives some hope that the strong upward trend could be losing some steam,” he wrote in a comment

He noted that the fall in fuel and electricity prices had been offset by an “extremely strong upturn in food prices”, 13.5 percent year on year. 

Alexandra Stråberg, chief economist at the Länsförsäkringar insurance company, however, said that she did not think that the dip in headline inflation meant that the risk of rising prices was over. 

“Unfortunately, it probably hasn’t turned the corner yet,” she told TT. “This is only a short pause.” 

In the chart below from SCB’s press release you can see how four out of the agency’s inflation indexes have dipped in July, after a year of steady rises. 

The index which excludes energy prices, however, has been rising steadily since December. 

Source: Statistics Sweden