Anna Breman: The Swedish economy is in a good position in a turbulent world
The recent sharp shifts in US trade policy have led to large movements in financial markets. “Trade barriers are bad for economic development. Much remains unclear about the scope and duration of the tariffs, making the assessment of their impact complex. But this unpredictability itself is inhibiting households and companies when making financial decisions.” These were the words of First Deputy Governor Anna Breman, speaking on Friday about the economic situation at ABG Sundal Collier in Stockholm.
At the same time, the Swedish economy is in a good position, said Breman. “Growth was higher than expected last year and, although the labour market remains weak, employment increased at the beginning of the year. The fact that we now have a new two-year industrial agreement in place also creates predictability in a turbulent time. Households’ real wages are rising and Swedish companies have shown a great ability to adapt to changing circumstances over the years. We are closely monitoring and analysing developments to assess the extent and impact of increased trade barriers on the Swedish economy.”
Inflation has broadly developed as expected since our last decision, said Breman. CPIF inflation is at the target of 2 per cent but underlying inflation remains slightly elevated. “The strengthening of the krona and easing of world market prices for some foodstuffs suggests that underlying inflation is also falling back but the effects of increased tariffs on inflation in Sweden are not clear-cut. This partly depends on how much demand is dampened by the turmoil abroad but also on the extent of tariffs imposed and whether or how the EU responds with countermeasures.”
The task of monetary policy is to contribute to economic stability by holding inflation close to 2 per cent and maintaining confidence in the inflation target. ”This is important not least in times of uncertainty. If we judge that the outlook for inflation and economic activity is changing, we will adjust monetary policy.
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