Jansson: Some aspects of the economic situation
It is now time for countries with weak public finances to assume a greater responsibility for their own situation in order to improve the situation in Europe as a whole in a sustainable way. This was the message delivered by Deputy Governor Per Jansson in a speech at Nordea on Tuesday in which he presented his analysis in the lead up to the monetary policy meeting in February.
Economic development abroad is marked by the debt crisis in the euro area. However, while many analysts are concerned that the planned consolidation measures will dampen growth too much, Per Jansson said that he is more worried that many countries are doing too little and acting too slowly. "What's the alternative?" he said, but pointed out that some progress is nevertheless being made in Europe "at approximately the rate the Riksbank has estimated."
The weak performance of the economy in the euro area has contributed to a slowdown in economic activity in Sweden, which in turn has led the Riksbank to cut the repo rate. It is now expected that monetary policy will continue to be expansionary in the years immediately ahead and Per Jansson pointed out that keeping the repo rate low over such long period of time may entail risks. There is a risk, for example, that the economy will become overheated, that the inflation rate will be too high or that household indebtedness will increase too much. However, Per Jansson's conclusion given recent developments was that these risks are limited, at least at the moment. "This was one of the important reasons why I was able to vote for a repo-rate cut," he said.
Read the whole speech in the PDF file below.
