Riksbank warns Middle East escalation could mean much larger rate hikes

If the war in the Middle East escalates, it could "mean significantly larger interest rate increases than the interest rate path from June implies," said Deputy Governor Göran Hjelm at the meeting.

Already this autumn, the most hawkish member, Anna Seim, believes that an increase may be required if supply shocks in the world interact with stronger domestic demand in Sweden.

My colleague Per Jansson is more dovish. He warns against raising rates early as a form of insurance against inflation. But he also admits that double increases may be needed if inflation becomes a problem.

Aino Bunge wants to wait until the picture of the inflation situation becomes clearer, while Riksbank Governor Erik Thedéen says the next step looks like an interest rate increase.