A Swedish interest rate increase as early as October is in line with the policy path laid out by the central bank, Riksbank Deputy Governor Cecilia Skingsley said.
Policy makers last month again pushed back a plan to raise rates for the first time in seven years, saying they didn’t see a tightening until towards the end of the year. But the minutes of that meeting showed disagreements growing among board members with investors and traders particularly surprised by Skingsley suggesting that a rate increase could come already in October.
In an interview in Malmo, Sweden, Skingsley said her personal position was within the forecast range of her fellow central bankers and that they are still on track to tighten monetary policy this year. “If you look at the path it accommodates October as well as December,” she said. “It’s hard to pinpoint exactly where you are versus your colleagues, and that can move around a little bit, but I think my statement was nothing dramatic, it was in line with how we see the policy path.”
Skingsley said it’s only natural that disagreements arise now that the bank “is in a nice position being able to discuss appropriate timing for a liftoff.” “We’re now past a recovery, we’re actually in an expansion phase,” she said. “Inflation is close to 2 percent, inflation expectations are now more or less anchored again.”
Nevertheless, the bank will still move with caution. Inflation pressures are still elusive in the largest Nordic economy, with the measure excluding energy holding below the 2 percent target at the tail end of a growth boom. “There are no biases in the forecasts, but given our history, we are at negative rates and if you get it wrong it’s better to be too late rather than too early,” she said.