Several clients – representatives from large corporates and institutions – had gathered at SEB’s head office, where the bank’s Chief Economist Jens Magnusson moderated the discussion with the governor.
Erik Thedéen described the ongoing war in the Middle East as a “significant supply shock” and underlined how difficult it is to assess how long‑lasting and extensive the effects may be. The Riksbank “spends a great deal of time on alternative scenarios,” he explained.
He then outlined two possible paths. One in which the policy rate may have to be raised – for instance if sharply higher energy prices over an extended period push inflation upwards. And another in which the rate may need to be cut – for example if heightened uncertainty leads to a sharp drop in consumption and growth.
At the same time, he emphasised Sweden’s strong starting position – with solid public finances and relatively low dependence on oil and gas – even though household debt levels remain a source of slight concern.
Jens Magnusson turned the discussion to timing: when does the Riksbank know which scenario is taking shape, and how swiftly must it then move?
“That’s the difficult part”, Thedéen replied. “We need to act when we are reasonably confident. We shouldn’t get too trigger‑happy with a rate hike, for instance. But when we know for certain where things are headed, we’re already acting too late.”