By Niklas Pollard
STOCKHOLM (Reuters) – Sweden is well-placed to deal with the changing environment brought on by abrupt shifts in trade and security policies, the Swedish central bank’s Deputy Governor Anna Seim said on Thursday.
“In Sweden we have stable economic-policy frameworks and strong public finances. All this puts us in a favourable position that many other countries lack,” Seim said in a speech.
The Riksbank held its key interest rate at 2.25% at its latest meeting, on March 20, and forecast unchanged rates for the foreseeable future though uncertainty, not least linked to U.S. policy moves and global trade, is unusually great.
Since then President Donald Trump’s sweeping new tariffs and the market turbulence surrounding them have unsettled the outlook still further. Trump said on Wednesday he was again increasing tariffs on China but pausing recent hikes for others, sending stock markets sharply higher on Thursday.
“It shows above all that it is very uncertain right now, what policies will be introduced,” Seim told Reuters after the speech. “It changes from day to day…and that is a challenge for policy makers all over the world to deal with,” she added.
Seim said Sweden’s position was good despite details of Trump’s trade policy remaining unclear and the uncertainty making assessing developments in economic activity and inflation unusually difficult.
“It’s hard to assess the effects of these tariffs – we think they will be inflationary but mainly in the U.S., but we could have some contagion on the Swedish economy,” Seim said.
Analysts at several of Sweden’s biggest banks, whose predictions had largely chimed with the Riksbank rate forecast, have in recent days predicted the trade turmoil and related economic downturn may lead to one or more rate cuts this year.
“It is too early to say how we will act (at the monetary policy meeting in May) and we will have to analyse incoming data and see what we think it could mean for our forecasts,” Seim told Reuters.
(Reporting by Niklas Pollard. Additional reporting by Johan Ahlander and Essi Lehto, editing by Terje Solsvik and Toby Chopra)
