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Sweden’s Riksbank extends Ingves’ term

Sweden's Riksbank has announced that governor Stefan Ingves will be given a further six year term as chairman of its executive board.

Published: 28 June 2011 15:32 CEST

Sweden's Riksbank extends Ingves' term

“We are pleased and honoured that Stefan Ingves has agreed to stand for re-election for a further term of office. This ensures good continuity in the work of the Riksbank,” said Johan Gernandt and Sven-Erik Österberg, chairman and vice chairman respectively of the bank’s General Council, in a statement on Tuesday.

The bank cited Ingves’ record since being appointed governor in 2006 as reason for his re-appointment.

”Stefan Ingves has done invaluable work as governor of the Riksbank since 2006. He is highly competent and able and has a valuable international network of contacts,” the statement read.

Although Ingves’ term does not finish until the end of the year, the Riksbank was keen to make an early announcement.

Deputy governors Svante Öberg and Lars Nyberg have previously informed the General Council that they intend to leave the Riksbank when their terms are up at the end of the year.

“The process of appointing two new Executive Board members has begun and an announcement will be made during the autumn,” Gernandt and Österberg advised.

Aside from his role as governor of the Riksbank, Ingves is also a member of the ECB General Council and a member of the board of directors of the Bank for International Settlements (BIS).

Prior to his current role he has been employed at the International Monetary Fund and has served as director-general of the Swedish Bank Support Authority.

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Riksbank deputy 'open to reconsidering raising rates in April'

Uncertainty in the financial market following bank runs in the US and a crisis at Swiss bank Credit Suisse could have changed the playing field, he told TT in an interview.

“It affects which level the key interest rates need to be in order to have a contractive effect,” he said, referring to the recent days of financial market turbulence. “We can’t just look at key interest rates by themselves. It’s the key interest rate in combination with all of these developments which determines how tight financial policy will be.”

He said it was not yet obvious what decision should be taken.

“It’s clear that monetary policy needs to stay tight, but what level of interest is that? We need to assess all of the current developments there.”

‘Could go in different directions’

In theory, there could be such a serious financial crisis, with such a severe effect on lending and banks’ financing costs, that the central bank would be forced to adopt supportive measures, even lowering the key rate.

Flodén doesn’t think Sweden is in that situation, although he thinks there’s a possibility it could happen.

“It’s not something I can see happening right now, at least, although this could go in different directions.”

He added that he doesn’t see any reason for any “special concern”, toning down the risk that a crisis for two smaller niche banks in the US and at Credit Suisse could affect the Swedish financial system.

“Of course, it could lead to some stress, but there aren’t actually any particular signs in Sweden, which are worrying me,” he said.

Flodén is one of six members of the Riksbank executive board, led by Riksbank chief Erik Thedéen, responsible for making a decision on whether interest rates will go up again at the end of April.

The Riksbank has indicated that a rate hike of between 0.25 and 0.5 percent from the current 3 percent rate could be necessary.

Flodén described the most recent inflation statistics for February, where inflation unexpectedly rose to 12 percent, as “not good at all”. So-called KPIF inflation, where the effect of mortgage rates is removed, rose from 9.3 percent to 8.7 percent in January. The Riksbank’s goal is 2 percent.

“It’s clear that inflation is still far too high and that monetary policy needs to be focussed on combatting inflation,” he said, adding that inflation statistics for March will be released before the central bank is due to make a decision on whether to raise rates or not in April.

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