Sweden’s Riksbank extends Ingves’ term

Sweden's Riksbank has announced that governor Stefan Ingves will be given a further six year term as chairman of its executive board.

Sweden's Riksbank extends Ingves' term

“We are pleased and honoured that Stefan Ingves has agreed to stand for re-election for a further term of office. This ensures good continuity in the work of the Riksbank,” said Johan Gernandt and Sven-Erik Österberg, chairman and vice chairman respectively of the bank’s General Council, in a statement on Tuesday.

The bank cited Ingves’ record since being appointed governor in 2006 as reason for his re-appointment.

”Stefan Ingves has done invaluable work as governor of the Riksbank since 2006. He is highly competent and able and has a valuable international network of contacts,” the statement read.

Although Ingves’ term does not finish until the end of the year, the Riksbank was keen to make an early announcement.

Deputy governors Svante Öberg and Lars Nyberg have previously informed the General Council that they intend to leave the Riksbank when their terms are up at the end of the year.

“The process of appointing two new Executive Board members has begun and an announcement will be made during the autumn,” Gernandt and Österberg advised.

Aside from his role as governor of the Riksbank, Ingves is also a member of the ECB General Council and a member of the board of directors of the Bank for International Settlements (BIS).

Prior to his current role he has been employed at the International Monetary Fund and has served as director-general of the Swedish Bank Support Authority.

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Sweden’s Riksbank raises rates above zero for first time since 2014

Sweden's central bank has increased its key interest rate to 0.25 percent, marking the first time the rate has been above zero for nearly eight years.

Sweden's Riksbank raises rates above zero for first time since 2014

In a press release announcing the move, the bank said that it needed to take action to bring down the current high rate of inflation, which it predicts will average 5.5 percent in 2022, before sinking to 3.3 percent in 2023.

“Inflation has risen to the highest level since the 1990s and is going to stay high for a while. To prevent high inflation taking hold in price and wage developments, the directors have decided to raise interest rates from zero to 0.25 percent,” it said. 

The Riksbank, which is tasked by the government to keep inflation at around two percent, has been caught off-guard by the speed and duration of price rises.

Just a few months ago, in February, it said it expected inflation to be temporary, predicting there was no need to increase rates until 2024.

The last time the key inflation rate was above zero was in the autumn of 2014. 

In the press release, the bank warned that the rate would continue to increase further in the coming years. 

“The prognosis is that the interest rate will be increased in two to three further steps this year, and that it will reach a little under two percent at the end of the three-year prognosis period,” it said. 

According to the bank’s new future scenarios, its key interest rate will reach about 1.18 percent in a year, and 1.57 percent within two years. 

In a further tightening of Sweden’s monetary policy, the bank has also decided to reduce its bond purchases. 

“With this monetary policy we expect inflation rates to decline next year and from 2024 to be close to two percent,” the bank wrote. 

Annika Winsth, the chief economist of Nordea, one of Sweden’s largest banks, said the rate hike was “sensible”. 

“When you look at how inflation is right now and that the Riksbank needs to cool down the economy, it’s good that they’re taking action – the earlier the better. The risk if you wait is that you need to righten even more.” 

She said people in Sweden should be prepared for rates to rise even further. 

“You shouldn’t rule it out in the coming year. Then you’ll have a once percentage point increase which will go straight into fluctuating mortgage rates.”