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ECONOMY

Chief of Sweden’s finance watchdog appointed next Riksbank governor

Stefan Ingves, the central bank governor who helped steer Sweden through the 2007 financial crisis, and then presided over years of negative interest rates, is to step at the end of the years.

Published: 17 June 2022 16:42 CEST
Chief of Sweden's finance watchdog appointed next Riksbank governor
Erik Thedéen, the next governor of Sweden's Riksbank, holds a press conference following his appointment. Photo: Pontus Lundahl/TT

Ingves, who has spent 17 years as Governor of the Riksbank since taking up the post in 2006, will leave the bank when his term expires at the end of this year, to be replaced by Erik Thedéen, who currently leads Sweden’s Financial Supervisory Authority. 

“These years have been eventful and stimulating and it has been a great honour to head up the Riksbank’s work, together with… all of the knowledgeable and dedicated employees at the bank,” Ingves said in a statement.

“I have had the privilege of working with the best, both in Sweden and around the world, and I have been involved in making the Riksbank into an institution ranked as one of the best central banks in the world. This has been a source of great joy.” 

At a press conferene, Thedéen said he was “proud and humbled” to have been chosen as the bank’s next governor, and said he had accepted the offer immediately. 

“That’s because this is, I believe, and extremely exciting job, an important job, and a job that comes with great responsibility.” 

Thedéen has been given a six-year appointment to the position.

Alexandra Stråberg, chief economist at Sweden’s Länsförsäkringar insurance group, expressed her surprise that a woman had not been chosen for the first time since the Riksbank was founded in 1929. 

“Erik in an insider in the world of Swedish government agencies and has to be seen as a conservative choice,” she said.

Robert Bergqvist, chief economist at SEB, said it would be “interesting to see” if Thedéen would be a hawk or a dove in monetary policy, but said that the return of inflation as a threat was anyway changing the approaches of central bankers worldwide. 

Torbjörn Isaksson, an economist at Nordea, predicted that Thedéen might bring a tougher approach towards controlling inflation. 

Susanne Eberstein, the chair of the Riksbank’s board, and the vice chair Michael Lundholm praised Ingves for what he had done in his time. 

“Under Stefan Ingves’s leadership the Riksbank has taken big, innovative steps, among them being the development of the e-krona,” she said. “His engagement in communicating the role of the central bank, its goals and decisions has helped make the Riksbank more transparent and accessible.”  

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MONEY

Swedish central bank chief: Economy entering ‘new phase’

Erik Thedéen, governor of Sweden's central bank, the Riksbank, believes that the country's "surprisingly resilient" economy is entering a new phase after a few years of inflation and rising interest rates.

Published: 20 May 2024 14:56 CEST
Swedish central bank chief: Economy entering 'new phase'

“Concerns remain, but from an inflation perspective, prospects look much brighter,” Thedéen said at an event at the Swedish Economic Association. “We are entering a new phase for monetary policy and for the Swedish economy, as inflation is now back close to the [two percent] target, which among other things enables real wage increases.”

Earlier in May, the central bank lowered the policy rate by 0.25 percentage points to 3.75 percent – the first time the rate has dropped in eight years, after a period of eight hikes between 2022 and 2023, where the rate rose from 0 to 4 percent.

These hikes were made in order to lower inflation, which at its highest point in December 2022 stood at 10.2 percent.

“The upturn [in inflation] was partly due to a series of global supply shocks that led to sharp cost increases for companies, and partly due to a large pent-up consumption need among households after the pandemic, and thus high demand,” he said.

“Together, these factors in turn contributed to a change in the nature of companies’ pricing behaviour. This manifested itself in more frequent price increases and a greater pass-through from cost increases to price increases.”

The most recent inflation figures from March and April this year put inflation at 2.2 and 2.3 percent, much closer to the central bank’s 2 percent target.

“We now know that inflation is by no means ‘dead’, as it was sometimes labelled when inflation was below the central banks’ inflation targets for a long period,” Thedéen said, before warning that prices may be more prone to increasing now than they were in the past.

“The threshold for raising prices may be lower now than it was before. For monetary policy, it will be important to monitor price-setting indicators,” he added.

He warned that we may not yet have seen the full impact of the hikes to the country’s policy rate, while describing the Swedish economy as “surprisingly resilient so far”.

“Interest rate-sensitive parts of the Swedish economy have of course been affected by the rate hikes. Household consumption has declined and residential investment has fallen sharply. But at an aggregate level, this has been offset by the relatively better performance of other parts of the economy.”

One factor behind this resilience, he said, was the high demand for labour.

“This may reflect the fact that companies have not anticipated a deep or prolonged downturn in economic activity and that real wages have been weak.”

Things are definitely looking brighter, but we may not be out of the woods just yet, he warned.

“There are some questions about what has happened to the structural economic relationships after the years of high inflation and, as always, there are risks of worse developments ahead. But so far, a ‘soft landing’ seems to be within reach.”

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