Committee on Finance hearing on the Riksbank's operations and monetary policy

Year 2024: Stable inflation, stronger self-financing and new strategic plan

Governor Erik Thedéen began the hearing by noting that last year was characterised by a substantial shift in monetary policy, which contributed to inflation stabilising at the target: “Our determination to bring inflation down to target paid off. Long-term inflation expectations are also firmly anchored at 2 per cent, indicating strong confidence in the inflation target.”

Furthermore, Mr Thedéen described the work in 2024 on how the Riksbank's self-financing could be strengthened. As of this year, the Riksbank also has the possibility to require credit institutions to hold interest-free deposits at the Riksbank. “Strengthening our self-financing safeguards our independence. I therefore welcome the legislative amendment, which shows that the principle of an independent central bank has strong parliamentary support.”

Mr Thedéen also mentioned that work had begun on developing operations based on a new strategic plan for the period 2024-27, with the vision of being an open and stable central bank at the forefront, focusing on improving capabilities in areas such as data analytics, artificial intelligence and contingency preparedness. He also added that the Riksbank's headquarters is undergoing a multi-year and extensive renovation.

Well-placed to deal with an uncertain world

The second part of the hearing focused on current monetary policy.

Since May last year, the Riksbank has cut the policy rate six times, down to 2.25 per cent. The interest rate cuts and rising real wages are creating the conditions for stronger economic growth. “We now see signs of a business cycle rebound. GDP growth was clearly higher than expected in the second half of last year. At the same time, the signals for the beginning of this year are more mixed,” said Mr Thedéen. 

Recent inflation outcomes have been slightly higher than expected. “It remains to be seen how much of this is due to temporary factors and what affects the inflation outlook in the slightly longer term, but it calls for vigilance,” he continued.

The international turmoil has changed market growth expectations, with weaker growth now expected in the United States and stronger growth in Europe than was anticipated just one month ago. In this environment, European long-term interest rates have risen and the krona has strengthened. “Ahead of our next monetary policy meeting on 19 March, we will weigh up how the new information affects the outlook for economic activity and inflation in Sweden.”

Mr Thedéen stressed that we are living in unusually turbulent times, with both a deteriorating geopolitical situation and escalating trade conflicts. “In Sweden, we are well placed to manage this uncertainty. “We have strong public finances, and we at the Riksbank have both the tools and the preparedness to act to keep inflation at a low and stable level.”