Central Bank Chief Warns of Rising Food Prices

Rising food prices as well as a weak Swedish krona. These are two concerns according to Riksbank top executive Per Jansson. In the worst case, future interest rate cuts may be jeopardized, he warns.

» Published: November 13 2024

Central Bank Chief Warns of Rising Food Prices
Photo: Christine Olsson/TT

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Fears are raised in connection with the Swedish Central Bank presenting its protocol from the latest monetary policy meeting. Then, it was decided to lower the interest rate by 0.5 percentage points, the largest decrease in ten years, which now means an interest rate of 2.75 percent.

Per Jansson points out that he, like the rest of the Swedish Central Bank management, supports the decrease and the plan to continue lowering at the next monetary policy meeting in December and during the first half of 2025, provided that inflation and economic outlooks remain unchanged.

Alarming Development

A threat to continued interest rate cuts is food prices, where he highlights the price increase in September as alarming.

"After the very tough period that households have now been forced to go through, naturally, new large price increases on particularly essential goods are not at all welcome. There would, of course, be very little understanding and acceptance among the Swedish people for such pricing behavior," he says.

Per Jansson warns that future interest rate cuts may be affected or instead transformed into increases.

"In a bad scenario, such changes could mean that future interest rate cuts are delayed or, in the worst case, that the interest rate may need to be raised again during a period," he says.

Has Weakened

The Swedish krona has simultaneously weakened against the euro in recent weeks and one euro now costs around 11.60 kronor. Even worse is the situation against the dollar, which Per Jansson notes has strengthened by around 7 percent since the last monetary policy meeting.

"If the trend of a weaker krona continues, it will eventually become a factor that clearly affects inflation and thus our monetary policy," warns Per Jansson.

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By TTEnglish edition by Sweden Herald, adapted for local and international readers

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