Swedish Central Bank Poised to Respond to Economic Uncertainty

The turbulence surrounding the Trump administration's tariffs and security policy overhaul has "undoubtedly increased uncertainty" around both inflation and recovery in the Swedish economy, according to Vice Governor of the Central Bank Aino Bunge. The Central Bank is, according to Bunge, ready to act "if necessary".

» Published: April 08 2025

Swedish Central Bank Poised to Respond to Economic Uncertainty
Photo: Lars Schröder/TT

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It's very turbulent right now, says Aino Bunge to TT about the stock market turmoil of the past few days – after a speech at an event arranged by the state-owned mortgage bank SBAB.

It's clear that I'm worried, she adds.

When it comes to what measures may be relevant from the Swedish Central Bank's side, the vice governor mentions, among other things, that there is a preparedness at the Swedish Central Bank to provide liquidity to the credit market if needed.

This preparedness always exists. But it's not something we see as relevant in this situation, she says.

Increased uncertainty

The effects of the trade war initiated by US President Donald Trump since he took office in January are, according to Bunge, so far increased concern about future growth and sharp stock market falls.

The effect on inflation is more uncertain. But the effect on growth is quite clearly negative, says Bunge when assessing the consequences of the US tariffs and other countries' countermeasures.

She adds that she sees the sharp stock market falls as a market reaction to the increased risk of recession in the US and other parts of the world.

Financial stability is also threatened by the development, she believes.

There are signs of great concern and it can always happen when there are large changes up and down in prices.

"No new forecast"

Access to credit and liquidity in the market has not been affected so far, according to Bunge.

So far, we see that the markets are functioning well. But these are questions that we follow closely and we have preparedness to act if we were to get a development that looks different.

What we've seen so far is large falls on the stock exchanges. But what we've seen on other markets – even if it's large movements – is that they've functioned well.

She is not ready to completely strike out the Swedish Central Bank's forecast from the interest rate meeting in March due to the recent days' intensified tariff bombardment from the Trump administration.

I'm not making a new forecast today. We'll have to come back to that when we have an interest rate meeting. But what I can say is that the uncertainty has increased further due to these tariffs and these messages that are going back and forth.

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

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