Today’s increase in the policy rate is the seventh in a row and it now stands at 3.5 percent. It is the highest level in 15 years.
Riksbank Governor Erik Thedéen believes that an increase of 0.5 percentage points was necessary, given inflation:
– We want to see a cooling of the economy because we see that we are so far from the goal. That’s why I voted for a double increase, says Erik Thedéen.
But two of the members of the Riksbank’s board of directors disagreed. First Deputy Riksbank Governor Anna Breman and Deputy Riksbank Governor Martin Flodén wanted a more modest increase of 0.25 percentage points.
– We should not exaggerate the difference between us in the executive board, but they wanted to proceed more slowly, that is correct, says Erik Thédeen.
“Many have been wrong”
According to some experts, the Riksbank should have had more ice in its stomach and waited for the effects of previous increases.
– We could have forced inflation down very quickly if we had gone hard. But we choose not to do that, precisely because we have ice in our stomachs.
However, Erik Thedéen is open to the possibility that the Riksbank may have made the wrong analysis.
– I am humbled by it. Many, including the Riksbank, have been wrong about the inflation trend. But all in all, I end up here, he says.
Watch the clip where Erik Thedéen explains how the Riksbank has reasoned.