She has long been a critical observer of the Riksbank, which she thinks is pushing too hard without waiting for the consequences that are already clearly visible, albeit with some delay.
— I think you should wait and see, they have raised a lot in a short time.
For a long series of years, the Riksbank, like many other central banks, has operated with zero interest rates, in Sweden with negative interest rates. Of course, that has encouraged borrowing.
“First, they have made sure that everyone has taken on debt, and when everyone has taken on debt, then they turn around,” says Annika Winsth.
Naively think it stops there
She thinks that the American central bank has acted correctly, to be more cautious when several banks had serious problems in the wake of the rampant interest rates.
— That was the first signal that when you go this fast, something breaks somewhere. It is naive to think that only American banks and Credit Suisse are stressed. It’s naive to think it’s just banks – it’s businesses, it’s households. The Riksbank has also encouraged floating interest rates by signaling that they should be low forever, says Winsth.
— So from that perspective, I think you should be careful, she continues.
But she doesn’t expect to be listened to. The still high inflation means that she, like many other economists, believes that the Riksbank will raise by 0.50 percentage points at the next interest rate meeting in two weeks.
— I hope they stay at 0.25, but if I were them I would wait.
Unwise to raise more
Robert Boije, chief economist at SBAB, also thinks that the Riksbank should calm down now. However, he is not as drastic.
— I think the Riksbank takes a very positive view of the fact that, above all, the underlying inflation declined in March. But given that the ECB recently raised its key interest rate to 3.5 percent, the Riksbank’s new-found concern about further krona weakening suggests that it will do the same, says Robert Boije and continues:
– However, I think it would be unwise if the Riksbank raises the interest rate more after that. On the one hand, it takes time for the already substantial interest rate increases that have been made to have a full impact on inflation, and on the other hand, Sweden has a considerably more interest-sensitive economy than most euro countries.