Erik Thedéen at the Riksbank fears that the Swedish economy may be affected by the gang crime that ravages the country.
FEAR: Sweden’s central bank governor, Erik Thedéen, allows himself to be troubled by the situation in his home country. Photo: TT NEWS AGENCY / Reuters / NTBPublished: Published:
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He says so in an interview with American Financial Times.
Thedéen believes that the trust citizens have in the public authorities and the police in the country may face resistance if they do not get control of crime.
– It is potentially a long-term threat to the growth potential in Sweden. It is also an important reason why we should deal with this and stop it. If you look globally at places where there is no trust, they are usually not countries with a lot of economic growth, says Thedéen.
In just two weeks, nine people were shot and killed earlier this autumn, according to VG. Earlier this autumn, it was decided that the defense will assist the police in the gang war.
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Falling inflation buys time
The governor of the central bank believes that trust in the system acts as a “buffer” in tougher economic times, and that you are completely dependent on this if the economy is to continue to grow.
Sweden is one of the countries in Europe that has struggled the most to get price inflation under control. In October, inflation came in at 6.5 per cent, which was nevertheless a big step in the right direction.
At the time of writing, the key interest rate is 4 percent. The market is pricing in a substantial probability that the Riksbank will decide to keep it unchanged during the interest rate meeting next week.
Many were surprised when they decided on an interest rate break last time.
Photo: Kyrre Lien / VG / NTB
First cut in 2025
During the interview with the Financial Times, the governor of the central bank says that falling inflation has bought the Riksbank time to assess the interest rate path further. The interest rate forecasts show that the first cuts will come in 2025.
– We are still concerned that we have inflationary drivers and price pressures that we do not fully understand. It has been much worse than we thought at the start of 2022, says Thedéen.
The Riksbank’s own inflation outlook believes in inflation, excluding electricity prices, of 7.6 per cent this year. They aim for it to fall to 2.9 percent in 2024, before it is down to the inflation target of 2 percent in 2025.
2023-12-05 11:22:57
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