Erik Thedéen: Signs of economic rebound, but uncertainty remains high

Mr Thedéen described his reasoning at last week's monetary policy meeting, when the Executive Board decided to cut the policy rate to 2.25 per cent.

"We are more confident about the way inflation is developing. Disregarding the volatile energy prices, inflation has been close to 2 per cent for some time. Most indicators of price pressures also point to inflation remaining in line with the target. But we must not take the lower inflationary pressures for granted. I think that the rising producer prices and higher world food prices call for some vigilance."

Over the year, many households will benefit from rising real wages, the fiscal policy measures that have been decided, and lower interest costs. This creates the conditions for an economic rebound. "We are now seeing early signs of a rebound in economic activity, for example, households have started to consume a little more and turnover in the housing market is increasing. But it remains to be seen whether the rebound is sustainable." 

At the same time, Mr Thedéen emphasised that the rebound in Sweden is also dependent on growth prospects among our main trading partners. The weak outcome in the euro area is worrying, and uncertainty regarding import tariffs could have a negative effect on the business climate and thereby willingness to invest.

"The gap between the growth outlook in the United States and that in the euro area, and the speculation about trade barriers, have led to large movements in the fixed income and currency markets. If the conclusion is that the United States is growing faster with increasing inflation risks and rising long-term interest rates as a consequence, this will also affect the conditions for Sweden. But it is too early to say. In this situation, it is wise to keep a cool head before drawing conclusions about the effects on the Swedish economy."