Jansson: Will act forcefully if inflation problem set to get serious
Deputy Governor Per Jansson of the Riksbank has emphasized the central bank’s commitment to maintaining confidence in Sweden’s inflation target amid ongoing economic uncertainties. Speaking at an event with the Swedish Unions within Industry, Jansson highlighted the importance of vigilance in the face of potential spillover effects from global developments, particularly rising energy prices and geopolitical tensions in the Middle East.
Jansson noted that while inflationary pressures are currently lower than they were in 2022, the Riksbank remains prepared to adjust monetary policy if necessary to ensure price stability. “The Riksbank’s most important contribution, now as then, is to maintain a clear focus on inflation,” he stated. This approach aims to create predictability and support sustainable economic development.
The deputy governor also acknowledged the role of recent policy actions in stabilizing inflation. The reduction in VAT on food and the broader economic recovery have contributed to a more favorable inflation outlook. However, Jansson warned that uncertainty remains high, and the central bank must remain ready to respond to any signs of renewed inflationary pressures.
Jansson’s remarks align with broader concerns about the anchoring of inflation expectations. Recent studies indicate that while professional forecasters’ expectations remain well-anchored, consumer expectations have shown signs of deterioration, particularly among those identifying as Democrats or Independents. This divergence underscores the importance of maintaining credibility in inflation targeting to prevent a self-fulfilling inflationary spiral.
In light of these challenges, Jansson reiterated the Riksbank’s readiness to act decisively if inflationary pressures intensify. “It is important not to act hastily and then have to make a U.S. of it, or to be late and fall behind the curve,” he said. The central bank’s wait-and-see approach at its most recent monetary policy meeting reflects this cautious stance.
Ultimately, Jansson’s comments highlight the delicate balance central banks must strike in managing inflation expectations amid a complex and evolving economic landscape. The Riksbank’s commitment to maintaining price stability remains a cornerstone of its policy framework, ensuring that inflation expectations remain well-anchored and that the economy remains resilient to external shocks.
