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Following months of speculations, the General Council of the Riksbank announced on 29 September that it had decided to extend Stefan Ingves’ mandate as Governor of the Riksbank by five years.
Stefan Ingves has been the Governor of the Riksbank – the world’s oldest central bank – since 2007. During this time, he has led the bank through much-criticised rate hikes following the financial crisis, introduced the current record-loose policy with negative rates and a quantitative easing programme and handled a difficult battle within the Riksbank Executive Board.
Following the global financial crisis in 2007-09, the performance of the Riksbank attracted significant interest among central banks and economists worldwide due to its policy responses. The Swedish economy rebounded quickly after the crisis and interest rates, having been cut sharply during the crisis, were raised in 2010 – 2011, mainly due to concerns over high levels of household debt. The tightening of monetary policy proved highly controversial and was criticised by the likes of Nobel Laureate, Paul Krugman and the United States Federal Reserve Chair, Janet Yellen. Furthermore, members of the Riksbank Board were deeply divided over the policy and – uncharacteristically – aired their grievances in media. (For further reading on the topic: https://mundus-international.com/harsh-criticism-riksbank/)
Then, the Riksbank changed tack, abandoning the tight policy, and dramatically lowering the repo rate until it was negative. This was officially justified by with the claim that it was following the trend of other central banks. Unofficially, many thought it was an attempt to lower the Krona and allow exports to drive growth. However, unlike other central banks around the world, which have become more balanced in their weighting of the risks of inflation vs deflation, the Riksbank has remained in the words of Nordea ‘inflation target nutters’.
The General Council of the Riksbank also announced today that it had extended First Deputy Governor Kerstin af Jochnick’s mandate by six years. The Executive Board of the Riksbank consists of six members, who are appointed for five or six years. The other members of the Executive Board are Deputy Governors Martin Flodén, Per Jansson, Henry Ohlsson and Cecilia Skingsley.