Ekholm: International dependence and monetary policy
On Friday, Deputy Governor Karolina Ekholm made a speech at the Chamber of Commerce and Industry of Southern Sweden in Malmö in which she spoke about Sweden’s international dependence and about how Swedish monetary policy is affected by a slowdown in economic activity abroad.
Growth slowed down in various parts of the world during the summer. This tendency has been reinforced as a result of the recent financial turbulence, which in turn is due to the uncertainty concerning public finances in the United States and certain countries in the euro area. Ms Ekholm pointed out that Sweden is affected by the financial turbulence around the world and that a lower rate of growth in Europe and the United States will lead to slower growth and to inflation in Sweden too, partly because these regions constitute such important export markets for Swedish companies. This was one of the reasons why the Executive Board decided to leave the repo rate unchanged in September.
Ms Ekholm also pointed out that the high level of public debt in the United States and some countries in the euro area requires extensive austerity programmes which may have a dampening effect on growth in the period ahead. We can therefore expect monetary policy to remain expansionary in the United States and the euro area. "In situations where there is great uncertainty it is always difficult to make forecasts about the future, and as the Swedish economy is so dependent on what happens internationally I am closely monitoring developments abroad," said Ms Ekholm. "I will now take a stance on recent events ahead of the next monetary policy meeting, which will be held at the end of this month".
You can read the entire speech in the PDF file below.
