Seim defends rate increase to protect inflation anchor
Riksbank Deputy Governor Anna Seim said early action against inflation protects purchasing power and anchors wage formation. At the Arenagruppen labour market conference, she defended the latest policy rate increase.
Wage formation needs an anchor
Deputy Governor Anna Seim said the Riksbank supports the labour market by keeping the inflation target a nominal anchor for wage formation.
She reiterated her position at the latest monetary policy meeting, when the policy rate was raised to 2 percent.
A stronger economy and higher company costs from global supply disruptions mean inflation is forecast to exceed the target.
Seim said monetary policy takes time to have its full effect, requiring action now to curb inflation.
High inflation erodes real incomes and purchasing power across society, with households of limited means hit hardest.
Low and stable inflation, she said, preserves the value of money and creates conditions for broad-based increases in prosperity over the long term.
Budgets and wages come first
The Riksbank takes fiscal policy and wage trends as given when setting rates.
Because rate decisions occur more frequently than budget decisions and wage agreements, it adjusts policy to those conditions.
Seim said communicating its reaction function helps it act predictably.
She also noted that AI-driven productivity gains can affect the neutral interest rate.
Easier price comparisons and dynamic pricing change market behaviour, while AI can also influence financial markets.
Central banks must prioritise AI's effects on inflation and company pricing, she said.
Timing over coordination
Seim's argument puts policy timing at the centre of inflation control.
Fiscal policy and wage settlements remain inputs to rate decisions, not variables the Riksbank sets.
Her emphasis is on a predictable response that protects purchasing power and the wage anchor.