Swedish central bank warns inflation 'could rise again'
Erik Thedéen, the governor of Sweden's central bank, the Riksbank, said that any interest rate cuts must be made "with caution" due to the risk of inflation rising again.
"Inflation has fallen and is on firmer ground," Thedéen said in a speech at the Västerbotten Chamber of Commerce in Skellefteå on Wednesday, according to a press statement from the bank.
Despite this, he did not rule out the possibility of the bank lowering the key interest rate in the first half of the year.
"We should therefore have seen the interest rate peak now, and there is some probability that we can cut the rate during the first half of the year. However, there are risks that could cause inflation to rise again. Any interest rate cuts must therefore be made with caution."
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His comments come two weeks after the bank's most recent monetary policy meeting, where it chose to leave the policy rate unchanged at 4 percent - the highest level since the 2008 financial crisis.
The bank stated in a press statement following the decision that risks which could cause inflation to rise again could include "renewed supply shocks resulting from geopolitical unease, company pricing behaviour not yet having normalised, or the krona weakening substantially once again".
The Riksbank's executive board holds eight monetary policy meetings per year, with the next scheduled at the end of March.
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"Inflation has fallen and is on firmer ground," Thedéen said in a speech at the Västerbotten Chamber of Commerce in Skellefteå on Wednesday, according to a press statement from the bank.
Despite this, he did not rule out the possibility of the bank lowering the key interest rate in the first half of the year.
"We should therefore have seen the interest rate peak now, and there is some probability that we can cut the rate during the first half of the year. However, there are risks that could cause inflation to rise again. Any interest rate cuts must therefore be made with caution."
- Cheaper mortgages on cards as Sweden expects to cut interest rate by summer
- IN FIGURES: How could lower interest rates affect your Swedish mortgage?
His comments come two weeks after the bank's most recent monetary policy meeting, where it chose to leave the policy rate unchanged at 4 percent - the highest level since the 2008 financial crisis.
The bank stated in a press statement following the decision that risks which could cause inflation to rise again could include "renewed supply shocks resulting from geopolitical unease, company pricing behaviour not yet having normalised, or the krona weakening substantially once again".
The Riksbank's executive board holds eight monetary policy meetings per year, with the next scheduled at the end of March.
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