Thedéen: How a stronger krona can affect inflation

The stronger krona, the Trump administration's trade war and dramatic geopolitical changes are affecting monetary policy, according to the central bank governor Erik Thedéen. But the main scenario remains unchanged despite what he describes as "unusually turbulent times".

» Published: March 11 2025

Thedéen: How a stronger krona can affect inflation
Photo: Pontus Lundahl/TT

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Our main scenario, which we presented in December and confirmed in January, is that our economy will recover, that we will have higher growth in 2025 than in 2024 and that we will have an inflation rate that is roughly in line with the target. And I have no reason to deviate from that picture today, says Erik Thedéen to journalists after an inquiry in the Finance Committee in the Riksdag.

"Food items that drive"

He notes that inflation has been unexpectedly high in January and February, but this is offset by the stronger krona – which dampens inflationary impulses from imports – and the risk of a weak economy.

It is certain food items that drive, such as cocoa and coffee, for example. But there is no giant drama in this, he says.

I hope it can have a dampening effect, he says about how the strengthening of the krona against the dollar and the euro this year affects inflation prospects.

He promises a more in-depth analysis of the risk picture for inflation going forward in the interest rate decision at the end of next week.

During the inquiry, Thedéen noted that these are unusually turbulent times, which affect growth expectations in the USA and seem to push up growth expectations in Europe.

Risks economic stability

The large investments in defense and infrastructure now being planned in Europe can be financed with loans, taxes, or reprioritizations for the Swedish part. Thedéen does not believe that this will have any significant monetary policy effect.

For other European countries with weaker public finances, however, effects may arise, he warns.

It could have an effect on borrowing costs (interest rates), which become a bit more persistent, he says.

It risks challenging economic stability.

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

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