The Swedish economy is going in the right direction with a fall in inflation, but price pressure still remains too high, central bank Governor Erik Thedeen and First Deputy Governor Anna Breman told parliament’s finance committee on Tuesday.
“We understand that it is noticeable when interest rates rise. But the cost of a permanently too high inflation rate is significantly higher. We need to ensure that we regain purchasing power,” Thedeen said in prepared remarks.
The Riksbank last month raised its policy interest rate to 4.0% to combat high inflation and said it may hike again.
Breman said household consumption and savings, labour market developments and companies’ pricing behaviour would be key to follow in the time ahead.
“What determines the direction of monetary policy at future meetings will be our overall assessment of where inflation is heading. Monetary policy needs to be clearly contractionary for a period to come for us to return to sustainably low and stable inflation,” she said.
Source: Reuters