Jansson signals rate increases as inflation risks mount
Riksbank Deputy Governor Per Jansson stated that Sweden is preparing to begin raising the policy rate from 1.75 percent later this year. Speaking in London on September 30, Jansson cited mounting inflation risks from strong domestic demand, supply constraints and a weaker krona.
Rising demand meets supply constraints
Addressing audiences at Nordea and the Swedish Chamber of Commerce in London, Jansson explained the reasoning behind holding the policy rate at 1.75 percent during the September meeting while raising the rate trajectory.
Swedish economic growth has proven broad-based and robust, while external supply disruptions have continued to push up oil product prices.
Jansson noted that the risk of demand-driven price pressures had increased compared to August.
“The combination of rising demand and constraints and shortages on the supply side of the economy is dangerous from an inflation perspective,” Jansson stated, pointing also to the depreciation of the krona as an additional factor.
Prudence before policy normalisation
Although the Executive Board revised its policy-rate forecast upward, Jansson emphasized that initial inflation remains moderate, providing room to hold rates steady amid global uncertainty.
He characterized the upward revision not as an extreme adjustment, but as a standard step toward normalising the policy rate in an expanding economy.
The Riksbank plans to begin rate increases later in the year if macroeconomic conditions and inflation trajectories align with current projections.
A calculated pause with clear limits
The decision to hold rates at 1.75 percent buys temporary flexibility amid global uncertainty.
Yet relying on moderate starting inflation overlooks the compounding risk of a weak currency and tight supply.
The Riksbank cannot afford to delay rate increases if domestic demand continues to outpace capacity.
Source: Per Jansson in London on the economic situation
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