Riksbank hearing reviews 2025 operations and current monetary policy

Governor Erik Thedéen opened the hearing by describing 2025 as an eventful year marked by significant global economic uncertainty, partly influenced by the new US trade and security policy landscape.

The Riksbank advanced its preparedness in payments, fulfilling the legal requirement to operate five banknote depots.

A key milestone was reached in July with an agreement signed with card payment and retail trade actors to enable offline card payments, enhancing the resilience of the payment infrastructure.

Furthermore, the Riksbank introduced a deposit requirement for Swedish credit institutions, mandating them to deposit a certain amount without interest.

This measure ensured that the Riksbank's earnings covered administration costs, thereby strengthening its credibility and safeguarding its independence.

Thedéen also highlighted progress in IT and digitalisation, including modernised data and model management supported by AI, which streamlines the central bank's work.

Public confidence in the Riksbank also strengthened during the year, which Thedéen noted is crucial for monetary policy effectiveness and independence, emphasizing clarity, accessibility, and transparency as ongoing priorities.

The second part of the hearing addressed current monetary policy, with Governor Thedéen stating that the Swedish economy is in a favorable starting position.

Inflation is currently close to the Riksbank's target, interest rates have decreased, and the labor market shows signs of improvement.

At the Executive Board's most recent interest rate meeting at the end of January, the policy rate was set at 1.75 percent.

This level was assessed to strengthen economic activity and contribute to stabilizing inflation around the target in the longer term.

Subsequent economic outcomes have indicated a continued recovery, with underlying inflation potentially being slightly lower this year than initially projected.

However, Thedéen cautioned that recent developments in the Middle East underscore substantial geopolitical tension globally.

The Riksbank is closely monitoring these developments and awaits additional economic information for thorough analysis before its next monetary policy meeting to assess the outlook for economic activity and inflation.