On Wednesday, the Riksbank will issue a new interest rate statement, and leading economists disagree about which way the authority should go. Some believe that further increases are required to curb the still high inflation, while others think that the Riksbank should have ice in its stomach.
The split becomes clear when Mattias Persson, chief economist at Swedbank, and Laura Hartman, chief economist at LO, debate the issue in Aktuellt.
“Inflation is persistent”
Mattias Persson emphasizes that inflation is still “far too high”.
– My picture is also that inflation is persistent. It will come down, given that the Riksbank raises the interest rate. But it takes a little longer. And it is risky not to act, he says.
But according to Laura Hartman, it would be better if the Riksbank waits for the effects of the increases that have already been made.
– Housing investment plummets and consumption declines sharply. We have had major consequences and households risk becoming more broke with each interest rate increase, she says.
“The interest rate weapon not so effective”
She also believes that inflation in Sweden is to a large extent an imported problem as a result of, among other things, the war in Ukraine.
– Inflation is a huge problem, but the interest rate weapon is not that effective against inflation that comes from abroad, she says.
That picture is not shared by Mattias Persson.
– When inflation started to pick up, there were a lot of war effects and pandemic effects. But if you look at the underlying inflation today, it is broad. All commodities are basically rising, so this is no longer just commodity prices. This is a much broader and more persistent inflation, he says.
Watch the debate in the video player above.
