On Tuesday, the Riksbank received criticism for not lowering the key interest rate enough. Now the governor of the Riksbank defends the action in Efter fem, and says that more reductions are on the way.
– It would be stupid, we think, to move forward very quickly and change one’s mind, says Erik Thedéen.
On Tuesday morning, the Riksbank announced that the key interest rate will be lowered by 0.25 percentage points, from 3.75 to 3.5 percent.
While many are happy about the reduction, critics believe that the reduction was too stingy. Among other things, Swedish trade believes that “excessive caution” is hitting the industry. The trade union LO’s chief economist Torbjörn Hållö says that “The only ones who profit from the Riksbank’s unnecessarily high interest rates are the big banks”.
– There has been a huge discussion about whether it should be 50 points or 25 points. I think the important thing here is that we signal that we want to go down quite properly, says Riksbank governor Erik Thedéen in Efter fem.
Opens for faster lowering
The theme says that if the Riksbank’s plan holds, the key interest rate could land at 2.75 before the end of the year. This means that they are open to three further reductions already this year.
The governor of the Riksbank does not agree that it would be best to lower the policy rate faster than they have done.
– It would be stupid, we think, to move forward very quickly and change one’s mind. It is better to move forward quickly but do it step by step, says Thedéen.
Flags of troubled economy
The background to the interest rate cut is now that inflation has fallen significantly and is now in line with the Riksbank’s inflation target of 2.0 percent. At the same time, the Swedish economy is weaker while unemployment has risen.
At the same time, Erik Thedéen flags for continued uncertainty in the economy, and compares the policy rate cuts to a car ride.
– Much like when you drive a car and the fog clears, you start to increase speed, but you want to have a completely clear view before you really accelerate.