Bunge sees case for rate increase before year-end
Riksbank First Deputy Governor Aino Bunge said on October 12, 2026, that stronger activity and inflation pressures probably justify a rate increase before year-end. Speaking in Malmö, she also warned of financial risks from AI investment.
AI investment turns to debt
At the Chamber of Commerce and Industry of Southern Sweden, Bunge said AI already boosts investment and growth, with potential productivity and financial-market efficiency gains.
Adoption remains early, but development is rapid.
The Riksbank's Business Survey shows no workforce changes so far, though companies are questioning recruitment needs.
AI companies increasingly use loans rather than cash flows to finance investment for current and anticipated demand.
Disappointing results or firms falling behind would expose markets to losses.
More complex financing makes stress transmission harder to predict.
AI also enables more complex cyberattacks; incidents can spread between firms, requiring high cybersecurity standards and controlled use of AI defenses.
Recovery meets renewed inflation risks
Sweden's recovery is broadening.
Employment and recruitment plans have improved, but labor-market spare capacity remains.
Middle East war-related supply disruptions and a weaker krona risk excessive inflation.
At the September rate meeting, Bunge argued that stronger activity and inflation pressures probably justified a rate increase before year-end.
She considered the rate forecast reasonable, but said the scale of tightening remained unclear and required testing the way forward.
The Executive Board will assess all latest data before its November 3 monetary policy meeting.
Exposure extends beyond AI
Bunge's warning extends beyond AI companies' borrowing.
Swedish financial firms face exposure through AI shares and bonds as well as wider disruptions from declining risk appetite.
Rising public debt and geopolitical concerns compound this backdrop, while complex financing obscures how stress spreads.