Riksbank Governor: “We are living dangerously”

The economy is doing well, and inflation is increasing – but the Swedish economy is very dependent on the rest of the world, according to the Governor of the Riksbank, Stefan Ingves. “The low interest rate, globally, spills over on us,” said Ingves during a hearing on monetary policy in the Riksdag on Wednesday, reports DN Ekonomi. The paper writes that he is worried about interest rates staying low, while Swedish household debt is increasing. “In this respect, we are living dangerously in Sweden … Consequently, if economic development is also to be stable in the longer term, measures are needed from other policy areas to restrict the growth in household debt,” Mr Ingves concluded.

At the hearing, the Deputy Riksbank Governor, Per Jansson, said that the risks, which existed in the spring of 2015, when the ECB started its major asset purchases, were underestimated by many. “The Riksbank’s monetary policy, with a negative repo rate and purchases of government bonds, has contributed towards the situation now looking better. But inflation prospects need to improve somewhat before we can feel secure”, Jansson said according to a press release from the Riksbank.