Follow-up and evaluation of the monetary policy 2022

Ingela Nylund Watz (S)

Mr. Speaker! With high inflation and high interest rates, many households across Sweden are now being pressured, and the households that have it tightest and have the smallest margins are, of course, hit the hardest. There are many single parents – often it is mothers – who struggle every day to make ends meet. To push back inflation and dampen price increases is naturally important for everyone and not least for them.

Mr. Speaker! In December 2022, the highest inflation since the inflation target was introduced in the early 90s was recorded. The inflation target was introduced at a time when the Swedish economy was characterized by high and volatile inflation for decades.

Today, Sweden is significantly better equipped to meet and fight inflation. We have an independent Riksbank with a credible and well-anchored inflation target. It must also be said that the parties in the labor market have taken an enormous responsibility to ensure that Swedish wages do not increase so quickly that we get a wage-price spiral.

But the fight against inflation has come at a cost. Wage earners have accepted real wage cuts, and the proportion of households living in economic vulnerability has increased for the first time in several years. Therefore, fiscal policy has a great responsibility not to counteract monetary policy. This places high demands on fiscal policy priorities.

Follow-up and evaluation of the monetary policy 2022

The measures the government now chooses to implement are naturally, in the first instance and in essence, directed towards the most vulnerable. Tax cuts for high-income earners are, in our opinion, an example of a fiscal stimulus that is not necessary at the current time. We would simply have prioritized differently.

Mr. Speaker! We are now considering the report that evaluates and follows up on the monetary policy this year, and we are doing so with partially changed circumstances.

Since the new Riksbank Act and amendments to the Instrument of Government entered into force on 1 January, the Committee on Finance has received a broader and deeper responsibility for the evaluation of the Riksbank's goal fulfillment and efficiency.

To manage the expanded mandate, the committee has established a working group in which all parties are included. This working group shall lead the work and propose measures for the committee, which will handle them further.

The report we are dealing with today is, however, not about the future evaluation but about the evaluation of the Riksbank for 2022. At that time, the new Riksbank Act had not yet entered into force. We have therefore evaluated the Riksbank based on the old Riksbank Act, where the goal for monetary policy is specified as that the annual change in the consumer price index with fixed interest, KPIF, shall be 2 percent and serve as a benchmark for price and wage formation.

Russia's invasion of Ukraine and the pandemic's remaining disruptions in supply and demand have pushed up inflation during 2022.

Measured according to KPIF, it rose by 7.7 percent during the year and in December by a full 10.2 percent, which must be said to be a large deviation from the target. But the long-term inflation expectations still remained at nearly 2 percent during the year.

At the monetary policy meetings in April, June, September and November, the Riksbank collectively raised the policy rate from 0 to 2.5 percent. During 2022, the executive board has been unanimous in all decisions except at the meeting in February, when the policy rate was left unchanged at 0 percent and it was decided to continue purchasing securities to compensate for maturities. There were reservations from the deputy governors Breman, Flodén and Ohlsson.

Mr. Speaker! The committee has had several documents to carry out this year's evaluation: the Riksbank's own annual report on monetary policy and two open hearings of the executive board. Professors John Hassler and Per Krusell and docent Anna Seim at the Centre for Monetary Policy and Financial Stability at Stockholm University have also, on the committee's assignment, evaluated the monetary policy of 2022. Their report has been a valuable basis for the committee, and we share several of their conclusions.

The Committee notes and welcomes that the Riksbank, in its own account, highlights the need to improve the work with inflation forecasts because, similar to several other central banks, it underestimated the strength of the recovery after the pandemic. Some of the measures that the Riksbank highlights are increased focus on changes in companies' behavior regarding pricing, better monitoring of the external environment, and more work with models for different scenarios.

Mr. Speaker! The committee has reached some conclusions in broad agreement. Since inflation expectations during 2022 were close to 2 percent, we share the external evaluators' assessment that the Riksbank, despite everything, largely met the price stability target. But we also share the evaluators' assessment that monetary policy should have been tightened earlier, already in February. Earlier interest rate hikes and faster unwinding of the securities holdings could have led to a reduced risk of lost confidence in the Riksbank.

The Riksbank's forecasting work was deficient and missed the inflationary pressure that arose in several countries at the end of 2021. The Riksbank should also, at least at the meeting in February, have worked with different scenarios for inflation and upcoming policy rates.

Mr. Speaker! With this, I move to approve the committee's proposal in the report and wish the committee secretariat, my colleagues in the committee, the Speaker's Presidium, and the Riksdag Administration a very pleasant summer.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Dennis Dioukarev (SD)

Mr. Speaker! This is, therefore, a debate on the monetary policy 2022. Despite that, Ingela Nylund Watz and the Social Democrats seem to be stuck in yesterday's budget debate and continue to repeat the mantra where they try to mislead the Swedish people regarding what the government and the Sweden Democrats are actually doing.

People talk about lower taxes for high-income earners when this is actually about lower taxes for, among others, police officers and midwives. With Ingela Nylund Watz's logic, one wants instead to raise the tax by a thousand kronor a month from the Social Democrats' side for these groups.

What this is actually about is an indexing with KPI. It is something that is done every year, and it is something that governments of different colors have done. It is an indexing that is done in several other areas - the guarantee pension, student support, sickness benefit, etc. So why does one continue to try to mislead the population by dulling the debate and talking about something other than what it is actually about?

Since this is about monetary policy, I must take the opportunity to ask Ingela Nylund Watz and the Socialdemokraterna how they imagine their government base will manage to balance a budget when they cooperate with two parties that have unfunded measures of 21 billion kronor and 17 billion kronor respectively. What effect does Ingela Nylund Watz believe that would have on inflation?

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Ingela Nylund Watz (S)

Mr. Speaker! Thank you, Dennis Dioukarev, for the questions! To begin with, I maintain the view in the illustration I gave of how I believe the fiscal policy should act in order not to counteract the monetary policy. It is about making tough prioritizations in the fiscal policy.

Our priority has been different than the government's. The government has chosen to lower or refrain from locking the indexing for high-income earners at a cost of 13 billion. We believe it was a poorly balanced decision when it comes to not counteracting the monetary policy. We would have chosen to implement broader stimuli to households and welfare.

When it comes to which budget options are available in the chamber, we voted on that yesterday. How the budget options look after the next election – when it actually happens – if this government manages to hold together its support, we will see then.

(Applause)

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Dennis Dioukarev (SD)

Mr. Speaker! Yes, that is what we shall do. I am not worried at all regarding our ability to hold together our government base. If one looks at the opposition's side, one sees instead four split budget options. They diverge in all possible directions and corners.

When it comes to the government's and the Sweden Democrats' budget, both the Riksbank and the Fiscal Policy Council have noted that our budget option is well-balanced and that we are not opposing the Riksbank's monetary policy at all.

The indexing with a raised threshold for state tax also has no impact on inflation in the way that Ingela Nylund Watz is attempting to claim.

I would like to receive an answer again. How does Ingela Nylund Watz think inflation would be affected if the opposition's budgets, where they propose large unfunded stimulus measures, had become a reality?

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Ingela Nylund Watz (S)

Mr. Speaker! It will be exciting to debate different budget options going forward, just as we did in the chamber yesterday with the Sweden Democrats and all the other parties here in the Swedish Riksdag.

For the Social Democrats, we are extremely concerned with maintaining a tight fiscal policy that allows us to safeguard Sweden's opportunities to have a good welfare society also in the future. It is actually the case, if Dennis Dioukarev thinks about it, that the strong economy that Sweden has and that the government has taken over is a many-year effort with several years in a row of economic surpluses that have made the Swedish economy stand stable now. I believe that Dennis Dioukarev fundamentally has to thank the Social Democrats for that.

(Applause)

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Dennis Dioukarev (SD)

Mr. Speaker! The year 2022 goes down in history as a challenging year in every conceivable respect - in the form of human suffering and, in this context, in an economic sense.

For the first time in several decades, high inflation was a reality that we all faced - a phenomenon that Sweden and the majority of industrialized countries had not experienced in three decades and a reality that the vast majority perhaps did not believe would return at all.

We have had the luxury of living with a predictably low and stable inflation to such an extent that it has rather been the risk of deflation that has been discussed ever since I became a Member of Parliament in 2014. But today, inflation is a phenomenon that all Swedes feel. We have more expensive food, more expensive fuels, and higher electricity bills. Therefore, the Riksbank's goal of low and stable inflation, and thus the Finance Committee's review of the Riksbank's goal fulfillment, is particularly important in the new, hopefully temporary, inflation environment that we live in today.

So how did we end up here? Let me set a brief problem formulation.

In 2020, the world shut down due to the pandemic, with large falls in GDP as a result. Lockdowns and remote work caused supply-side effects, that is to say disruptions in global supply chains - in production and distribution - which led to shortages of goods and doubled freight prices. This happened at the same time as fiscal and monetary policy provided strong stimuli of demand. Much money was created, and cheap money was created. This in combination with a suppressed consumption need that completely exploded when the restrictions were lifted, and subsequently a European energy crisis, set up perfect textbook conditions for high inflation.

It is in the light of this dramatic development of events that the Committee on Finance evaluates the monetary policy of 2022.

The evaluation itself is not new. The committee has conducted it annually since 1999 when we received an independent Riksbank. What is completely new for this year, however, is the external report on the monetary policy 2022 which the committee has ordered from the Centre for Monetary Policy and Financial Stability, Cemof, at Stockholm University. The report is the first of its kind and, together with the committee's open hearing of the executive board, constitutes an in-depth basis for this year's evaluation.

And with the new Riksbank Act, higher requirements are also placed on the democratic scrutiny of the Riksbank, and therefore the Committee on Finance has received a clearer role in the scrutiny. A working group regarding Riksbank issues has been formed under the Committee on Finance, a group where the undersigned has been given the privilege of leading the work in the capacity of chairperson.

Mr. Speaker! The report's main conclusion is that the Riksbank has, for the most part, fulfilled the price stability goal during 2022. As a viewer, one might catch on and wonder how that is possible when we have had double-digit inflation. How could the Riksbank have done its job despite these figures? The answer to that question is that it is because the long-term inflation expectations are in line with the 2 percent goal.

By the long-term inflation expectations, I mean – and this is the core of the matter – that if inflation expectations among the general public, the market, and the parties in the labor market were to run away, i.e., that one reached a situation where one began to accept high inflation as the new normal, we would face completely different problems in the economy with price-wage spirals and other things that we absolutely do not want to see again. However, with the parties' collective agreement for the industry landing at 7.4 percent over two years, or 3.6 percent per year, and the market's long-term inflation expectations which continue to fall and stand at 2.1 percent for the month of May, the conclusion is that the credibility of the inflation target as a nominal anchor for the economy is still intact.

But there are, of course, views in the report regarding various policy decisions and the Riksbank's communication, views that deserve to be raised for public scrutiny and discussion.

Let me begin with the interest rate path. Already at the turn of the year 2021/22, Swedish inflation was measured at just over 4 percent according to the Riksbank's target variable KPIF, which means twice as high as the inflation target of 2 percent. Bank of England had at that point started raising its interest rate, in the USA inflation had started rising very rapidly and Swedish inflation was, as stated, a bit above the inflation target. Seen in this context, there is no lack of arguments that the interest rate should have been raised already at the February meeting 2022 and not at the April meeting. It also appears reasonable that one could have pulled off the bandage directly through a double hike in order to catch up with inflation.

At the same time, it is noted in the report that even if the monetary policy had acted perfectly, the effect on inflation would likely have been marginal because it is difficult for a central bank to steer price changes that have been largely caused by war and other supply disruptions.

It is, of course, in the nature of the matter that it is easy to criticize the Riksbank in hindsight, which must make these difficult decisions in real time. But to totally dismiss the fact that the warning signals were completely missing and that no one pointed out the risks during and after the pandemic is incorrect.

Let me also say something about the asset purchases. The report highlights the fact that the Riksbank raised the policy rate by 25 points at the April 2022 meeting but subsequently continued with QE, quantitative easing. To on one hand raise the interest rate and signal a tightening of monetary policy but on the other hand continue with expansive measures in the form of asset purchases appears contradictory, and this subsequently had consequences for the Riksbank's results.

The larger principal question in this context is what effect the asset purchases have on the functioning of the market. What happens if the market actors begin to count on the Riksbank always stepping in as a buyer in worse times, or as during 2022 when there was no longer any risk of financial collapse at all? The conclusion is that the method and the tool as such are legitimate and important for a central bank, but the application can be discussed.

Let me also say a few words in conclusion about the exchange rate. The depreciation of the krona is something that all Swedes feel through the fact that holiday trips have become more expensive but, above all, through the fact that food prices have risen sharply as a result of increased import prices. Then we have, of course, the electricity bills, which have a domestic political explanatory factor. This, however, falls outside the scope of today's matter, so I will leave it there.

I continue to state that the Riksbank does not have a fixed target for the exchange rate, but it is clear that a weak krona complicates the fight against inflation.

In theory, the Swedish krona should currently be undervalued against the currencies of other central banks that are further ahead in their interest rate hiking cycle and thus need to be strengthened in the long run, given that the Riksbank has some or any hikes left. But reality has trumped theory, and the krona is today down to levels that we last saw during the financial crisis in 2008.

The report authors note that exchange rates are notoriously difficult to predict and are influenced by so many variables that they can, in practice, be assumed to be random over time. We have, however, seen that the weakening has increased in connection with the turbulence in the Swedish commercial real estate sector, and thus the thesis that exists regarding an inbuilt real estate risk premium in the valuation of the krona is also strengthened, i.e., that the market simply opts out of risk, thus the krona, in favor of larger, more stable currencies such as the euro or US dollar.

The conclusions that the report points out are, firstly, that the Riksbank has limited possibility to influence the exchange rate, and secondly, to the extent that one can influence it, one should communicate much more clearly – or verbally intervene, if I may put it that way – how one views the krona and what the goal for the exchange rate actually is.

With these words, I conclude my speech and vote in favor of the committee's proposal. I also take the opportunity to wish the Speaker, the committee members, and the committee secretariat a happy Midsummer and a pleasant holiday.

(Applause)

In this speech, David Perez (SD) agreed.

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Ida Drougge (M)

Mr. Speaker! Every year, the Riksdag carries out a follow-up and evaluation of the previous year's monetary policy. The focus is on whether the goals have been achieved and whether the measures taken have been effective.

To do this, the committee reviews the report that the Riksbank provides to the Riksdag annually. We have done that this year just as in previous years. What is new this year is that we have also commissioned an external assignment for an independent evaluation of the monetary policy. It has been carried out by professors John Hassler and Per Krusell, as well as docent Anna Seim.

The report, which can be read in its entirety, goes through the decisions that the management has made, provides a number of conclusions and recommendations for the future, and concludes with four points of criticism. The report also answers common questions heard in the debate surrounding the Riksbank regarding the high inflation and how we combat it. It is both concise and understandable, even for those who are not themselves a professor or even an economist.

I want to pause a bit at just this. I believe, in fact, that it is important that the debate is broad, especially in economically tough times. It is important that it enables many to participate and that it lowers the threshold for reading up. If one has not been informed about monetary policy and economic issues previously, one should feel that one can become informed.

Knowledge and understanding do not, of course, make the money in the wallet stop losing value. It does not make the margins larger or make the costs of gasoline and food automatically drop. There is no magic spell. On the other hand, information and knowledge provide a sense of control. It creates transparency and is a basis for trust that monetary and fiscal policy are conducted with the aim of reaching the inflation target again and bringing down the high costs – nothing else.

For these reasons, the Committee on Finance conducted an open hearing. It can be viewed in retrospect on the Riksdag's website, and excerpts from it can be read in this report. The Riksbank provided a number of answers there based on the report and these points of criticism. They informed about a number of measures that they have already taken in view of it and about other things that they are continuing to work on.

This evaluation has become more than a paper product because we have made it so. It is a significant element and a sign that we in Sweden are still good at constructive criticism and objective debates and discussions, regardless of how it may sometimes sound in the political debate.

I really recommend reading the report.

In conclusion, I would like to share four spoiler alerts. The first is that we largely consider that the price stability goal has been reached, despite the high inflation.

Even though confidence in the inflation target has been maintained, the Riksbank's inflation forecasts have repeatedly been deficient. They underestimated the inflationary pressure. This increased the risk that confidence in the inflation target and the ability to reach it would be weakened.

Monetary policy should also have been tightened earlier, that is to say, the interest rate hikes should have been started earlier. It actually could have led to a somewhat lower inflation.

It is positive that one has increased their access to so-called fast data, in order to also have that type of basis for their forecasts going forward. But one should have been able to lean more on basic economic theory. That can be particularly important in times when unexpected and unusual changes occur.

One could also have sensed in February 2022 that we would have a longer period of high inflation. Therefore, the interest rate should have been raised earlier and one should also have stopped buying securities and instead started selling them. It should be added that three of the board's six members advocated for this.

With this, I move for approval of the committee's proposal for a decision.

(Applause)

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Ali Esbati (V)

Mr. Speaker! It is somewhat of a tradition that monetary policy and Riksbank-related issues are up for debate the day before the summer break begins. It is usually a seemingly unanimous committee without sharper conflicts. So that will also be the case, in essence, today. It depends more on the formulation of the matter than on the fact that monetary policy cannot or should not be a theme for discussion in, for example, the Riksdag.

This is more generally an expected and somewhat unfortunate side effect of the strong idea of the Riksbank's independence from the government and the Riksdag. The monetary policy itself would not be designed in a political context. Above all, it would not have genuinely political implications.

It becomes a bit extra strange in a situation where the importance of monetary policy has come into sharper focus, in part due to the ongoing inflation crisis. It is indeed ongoing in practically the whole world, but there are certain national differences in outcomes and counter-strategies.

The debate today concerns, as mentioned, a report from the Committee on Finance regarding the monetary policy 2022, which also includes an external evaluation, as has been mentioned. Vänsterpartiet is essentially in agreement regarding the conclusions.

I can, in itself, note that the Riksbank's security purchases are receiving some attention. It is an area that Vänsterpartiet early on, even before 2022, wanted to raise some concerns about. It was primarily about that type of quantitative easing, as one might call it, risking to fuel asset bubbles. They then contribute to increasing economic inequality in society, because asset ownership at the starting point is very unevenly distributed.

Of course, one should weigh it against potential gains. It could be to stabilize employment and growth or, in this case, more to contribute to stabilizing the financial system. But in this case, the gains appear comparatively marginal, at least with the final result in hand.

The point of view that we primarily have, and which has prompted a specific statement, not a reservation, concerns the dramatic development during 2022 when the design of monetary policy and other monetary policy-relevant issues have played a significant role in the development of the economy. It could have formed a basis in some form for a broader political debate, a societal debate, about monetary policy and about the Riksbank.

It may sound a bit tricky or nerdy. But there is a tension here. The goal of monetary policy is, simplified, a figure that one should follow and try to reach. When it is so clearly superior to other goals, it often leads to the thought that the monetary policy goal should not be loaded with judgments and political values and not affect different groups in different ways. That is not true. It is definitely not true when it comes to which methods one ultimately uses to try to reach that goal.

We in Vänsterpartiet have long been critical of the framework that governs the Riksbank's monetary policy. We have presented some of our views and proposals for reforms in our follow-up motion to the bill on the new Riksbank Act which the Riksdag adopted at the end of 2022. We proposed, among other things, that the inflation target should be supplemented with an employment target and that this target should not be subordinate to the inflation target. The monetary policy conducted in 2023 brings that criticism to the fore.

It is also about having a better, more reality-based and updated discussion about the actual inflation situation that we now see in Sweden and in the rest of the world. The current rise in inflation is driven by problems on the supply side, where the effects of Russia's war of aggression against Ukraine and the subsequent effects of the pandemic play a decisive role. But how it unfolds also depends on whether one has poorly functioning markets and a lack of competition within specific important markets. In Sweden, we have seen it in the electricity market, the food market, and within the banking sector.

These are structural problems that manifest more clearly in this situation and which lead to higher price increases within those sectors. We also see that it is largely price changes within these sectors that have driven up the Swedish inflation.

We know at the same time that monetary policy, at best, seems to work with a delay. Therefore, we mean, in contrast to some things that have been said here, that it would have been very reasonable in that perspective to imagine that the Riksbank, for example, at the beginning of 2023 had paused the interest rate hikes and at least let them play out before proceeding with further hikes, especially when it was clear that the economy was heading towards a slowdown and towards a recession.

It is problematic that monetary policy becomes so one-dimensionally focused on trying to influence inflation expectations, despite it being very difficult to see that interest rates have any direct impact on inflation itself. It becomes a tricky discussion to have in a reasonable way.

At the same time, the Riksbank has its inflation target of 2 percent to adhere to. It becomes a bit strange. If the Riksbank had had a clearer dual mandate for its monetary policy where real economic considerations could have weighed more heavily, one could reasonably have acted differently, at least during 2023, but above all, a situation where it can be questioned what effect interest rates have on the actual inflation development should lead to a larger discussion on the role of fiscal policy in combating inflation, including the need for measures to temporarily or more permanently change and improve the competitive conditions in the previously mentioned markets.

This is a discussion that we have partially had. We were, at least, some who tried to have it, for example yesterday during the debate on the spring budget. But it easily happens that many political actors hide behind the Riksbank's management of monetary policy and behind simplified – I would say outdated – norms and dogmas for inflation management.

We heard just a few minutes ago a representative for the leading party in the government coalition trying to muddy the waters regarding the government's fiscal policy and claiming that there are no major tax cuts for the best off and that there are no major cuts to welfare. But these are real events that cannot be removed through semantics. It says something about the priorities that exist in the fiscal policy.

Right now, it is the case that today's inflation is not wage-driven. When there is a growing amount of information and analyses suggesting that companies are taking the opportunity to raise prices and can do so to a greater extent where there are structural problems with strong market power for certain actors, the policy – the fiscal policy or the government policy – should reasonably be directed towards analyzing and acting on the areas where this can be influenced and addressed. But it is not happening, and it is also the case that the international debate on this seems absent. That is the truly big problem today.

In conclusion, Mr. Speaker, I would like to set aside monetary policy and its fiscal surroundings and take the opportunity, before the summer break – which in itself will be interrupted by some EU matter – to thank the presidium of the Committee on Finance, which I believe has handled the committee's work well, thank the energetic Speaker's presidium, and above all, thank the Committee on Finance's secretariat. It is a secretariat that plays a large but understated role in ensuring that the democratic process functions smoothly, quickly, and transparently. It is both large and small matters that must pass, and they are always handled in a well-intentioned and prompt manner.

For those of us who have a strong confidence in the parliamentary process, it is particularly important that the Riksdag can handle relevant issues in a dynamic but always careful and stable manner. Therefore, I would like to extend a special and very big thank you to them. Have a nice summer!

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Dennis Dioukarev (SD)

Mr. Speaker! I had not intended to take any remarks at all today, but there have been two because people are reacting to certain things that Ali Esbati takes up in his speech.

One thing I am thinking about is that in the specific statement, it is seen that the Left Party's ambition is to politicize monetary policy because they wish for the monetary policy goals to be governed by the Swedish Riksdag. This was something that the Sweden Democrats and several other parties opposed with emphasis in the Riksbank Committee. Pleasantly enough, we got through our proposal that it is not the Riksdag that shall govern the Riksbank's monetary policy or goals.

The second thing I reacted to is that they want a dual goal for monetary policy. Today, the inflation target is the overriding goal for monetary policy, but the Riksbank is allowed to take real economic considerations given that the long-term inflation expectations among the population and market actors are intact, which they are. The Riksbank is therefore already allowed to take real economic considerations in the current situation.

My question to Ali Esbati regarding the dual goal is what the Union law says about it.

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Ali Esbati (V)

Mr. Speaker! It is true that the Left Party believes that political issues are political. That is also what we develop in the motion on the Riksbank Act and in other contexts. The issues are political even if one says that they are not. Our point is that it can be expressed in different ways in the institutional framework around different issues.

Here one gets - which I tried to get at earlier - an illusion that monetary policy decisions do not have other types of political effects. Then it can be discussed what is the best institutional form for them, and we mean that it is not to try to talk away those implications. Therefore, it is very reasonable that the Riksdag has greater influence over the formulation of those goals. That is quite right, and it is very nice if more, thanks to Dennis Dioukarev's post, can take part in what the Vänsterpartiet thinks in these issues.

Regarding real economic considerations, the important point is that regardless of how the goals are formulated, there are implicit real economic considerations that will need to be taken into account. It is people who make the decisions, and the impulses one has to make the decisions are influenced by what one considers to be the state of the economy and what is important and what is not in an economy. Therefore, it would be reasonable to also formulate it differently.

What the union law says about this can be seen as subject to change - it was interesting to hear from a Sweden Democrat that it would not be so - but we mean that it is possible to utilize and test a space that may exist within the framework of the union law. Sweden, for example, is not in the EMU, and that is also a part of the union law.

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Dennis Dioukarev (SD)

Mr. Speaker! Fundamentally, it can be stated that if the Left Party's views, specific statements, and policies in this area were to gain traction, it would send Swedish central bank independence back to 1999. At that time, the Left Party was also, admittedly, against an independent central bank. It literally runs as a red thread through the Left Party's policy how one views independent monetary policy. That they want to politicize this institution is very clear in what Ali Esbati says, in the Left Party's specific statement, and above all in the positions the Left Party took in the Riksbank Committee. I am glad that it did not turn out that way.

Regarding the dual goal, the Sweden Democrats are not the EU's biggest fan. We can state that, but it is nonetheless not a statement that a dual goal would violate Union law. It is therefore not feasible policy.

I am thinking about a larger context, when one adds one plus one. It appears from the Left Party's spring budget motion that there are unfunded measures amounting to 21.2 billion kronor. One is therefore borrowing money in a high-inflation environment, and everyone knows what that leads to, namely even higher inflation. Given that background, one understands why the Left Party wants to abolish the inflation target in its current form. If one does not have a target, one cannot fail either.

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Ali Esbati (V)

Mr. Speaker! When it comes to budget policy, it is quite a lot contrary to what Dennis Dioukarev says. It is, in itself, a common occurrence when one discusses with the Sweden Democrats. The proposals that the Left Party submitted in the autumn in the budget and in the spring budget motion aim in several ways to push back the inflation as it looks today. I have pointed out here that we can state that there are structural problems in certain markets where it is possible to push back the important components of inflation. Even taxi fare increases have a different effect on the inflation development.

Dennis Dioukarev wants to instead distribute money to high-income earners and landowners, and that also has effects on inflation, albeit more tangibly upwards. That is where we disagree on how to act. What the government that Dennis Dioukarev rules over does to combat inflation is essentially nothing. There, we argue that our policy does more and is better.

In other respects, it is quite correctly stated that Vänsterpartiet has a different view on how economic policy should be designed. It is a view that is more focused on taking more real-economy considerations and taking inspiration from an economic-political and academic debate that has existed over a long period in Europe. In a few years, it will be more noticeable in the Swedish debate. Then, some of the positions that are taken for granted here will appear dated and strange.

He who lives shall see.

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Martin Ådahl (C)

Mr. Speaker! This debate illustrates how close these issues are to everyone's everyday life. For the first time in a long time, I experience that almost everyone is discussing at the kitchen table what the Riksbank will do at its next interest rate decision in June. The decision will affect private finances, where the interest costs for many have multiplied. Just as the Riksbank has shown, inflation hits household finances even harder than the interest rates do for most households.

The interesting thing in the debate is the role that the Riksdag has. The Riksdag has decided that monetary policy shall be independent. High and rapidly changing inflation is negative for the economy. We have in broad agreement said that these issues are delegated to the Riksbank, which is then independent. At the same time, we shall evaluate how it has gone. There must be some form of evaluation. But it is easy in the discussions to stumble over the next step regarding what we want the Riksbank to do here and now or even in the future.

There are some things we can do. The first is to carefully safeguard independence in our evaluations. The second thing is to keep the debate alive. It is important with open inquiries where tough questions are asked. It should not be a meddling with the Riksbank, but questions that exist out there must be asked. We shall not ourselves play interest rate analysts or judges, or give instructions to the Riksbank.

Then there are the excellent evaluations that have been carried out this year by some of our leading economists, namely John Hassler, Per Krusell and Anna Seim.

The third point is to state in different ways that the goal has been met. But it is almost mechanical. The Riksbank is the first to say that the goal has not been met this year. One is not anywhere near it. If inflation is over 10 percent and the goal is 2 percent, one has not reached the goal. At the same time, one is in good, or bad, company with almost all other central banks in the world. The measurements that have been made show that there is a confidence, and it has been there throughout the entire period that has been evaluated. I still believe that the Riksbank will meet the goal of 2 percent.

The fourth thing is not to go in and tinker with the conditions for how the Riksbank acts. This applies particularly now because many bonds have been purchased - it has been discussed and evaluated whether it is good or bad - to get up the inflation when it has been too low. Now, large losses have occurred. With the new Riksbank Act, one can question whether it has been good or not because one has replenished the Riksbank's own capital when the figures have become negative.

When we evaluate and review the Riksbank, it should be done in a way that is as automatic and as non-interfering as possible, based on the roles we have.

The fifth matter, and last, is that we shall learn from our roles in the chamber and how we influence the Riksbank. It is evident across the entire world that politics overstimulated the economy at the end of the pandemic. This has occurred partly through high fiscal expenditures, a too expansive policy, and partly because we, with good intentions, have presented such extensive guarantees that people have experienced that everything is safe. All our expenditures will always be covered by politics. Then the politics become even more expansive, and an expansive pressure in the economy has continued to persist.

It is important to focus on things in fiscal policy that help the Riksbank lower costs. This naturally includes competition, and it also includes things that can lower costs. If the costs of hiring are lowered, there will be less pressure on inflation. If the tax on labor is lowered, the supply is strengthened and the scarcity in the economy decreases. Saving on energy lowers energy prices. A Swedish supply of food ensures that there is no risk of price explosions on food.

There are things that can be done, and that is part of politics. We can discuss what is important or not, but we definitely have a role.

Let me summarize, Mr. Speaker. This is an evaluation debate. The Riksbank is not meeting the goal. This is stated in an evaluation that the prominent economists have made. The bank has nevertheless, in many ways, done what we can expect according to the frameworks that exist. Now we safeguard the bank's independence and its important mission moving forward to safeguard price stability.

With this, I would like to take the opportunity before the summer break to thank the Speaker's Presidium and the Speaker for all efforts and all tolerance with us members and all our shortcomings. You have made things much easier for us and shown great dignity at many important moments. I also want to thank the Finance Committee's office, which is invaluable. We stand here and appear as, I hope, quite well-organized. But it is a fantastic machinery that lies behind, for example in the form of the background material from the evaluation of the monetary policy. The work is done by this eminent office, where there are people with very great knowledge and great patience with us members. A very big thank you to them for their fantastic efforts. Furthermore, I thank my colleagues in the Finance Committee and the Presidium.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Yusuf Aydin (KD)

Mr. Speaker! Today's debate concerns the evaluation of monetary policy - a very important area that has a major impact on the economy as a whole but also, as someone has noted, on the financial situation of individual households and companies. This has been particularly relevant during 2022, which has been characterized by high inflation, sharply rising interest rates, and a weak krona.

As stated earlier, the Riksbank has a strongly independent position, which is regulated in the constitution. This independence also requires a democratic scrutiny of the Riksbank, and here the Committee on Finance has an important role to fill by evaluating and following up on the Riksbank's activities and goal achievement.

Mr. Speaker! Russia's invasion of Ukraine and imbalances between supply and demand in the wake of the pandemic contributed to inflation rising sharply in the rest of the world and Sweden during 2022. Furthermore, we can state that also some political decisions by previous S-governments and the left wing regarding the decommissioning of fully functioning nuclear power and on high requirements for reduction in fuel have led to high electricity and fuel prices. This has in turn led to increased costs for farmers, hauliers, food producers and traders and thus also to the high inflation.

Mr. Speaker! The external evaluation report prepared by the Centre for Monetary Policy and Financial Stability at Stockholm University has been a valuable basis for the committee's evaluation. Their assessment is that the Riksbank, despite the high inflation, fulfilled the price stability goal during 2022 in the sense that the long-term inflation expectations are still somewhat in line with the goal, which was also mentioned earlier. The evaluators therefore consider that the policy pursued has primarily been appropriate.

The evaluators are, however, critical of a number of aspects and of how the monetary policy has been designed. This concerns, among other things, the forecasts, which of course are difficult to make in such turbulent times; the inflationary pressure was underestimated and alternative scenarios should have been included. The evaluators' assessment is also that the interest rate hikes should therefore have started earlier and been more forceful.

They also mean that the Riksbank should have ended the purchases of securities during 2022, which were very extensive during the period 2015-2022 for the purpose of conducting a more expansive monetary policy. The purchases have amounted to nearly 1,000 billion, which is on par with the Swedish national debt. The Swedish National Audit Office has also previously announced that it will review whether the Riksbank's use of securities purchases has been effective and transparent.

A third question that has been discussed is the krona and its weakening. Here, the evaluators argue that the communication regarding the exchange rate and the weakening of the krona has been very sparse from the Riksbank's side and that one could have been clearer about how one views the exchange rate and whether one intends to influence the krona's exchange rate, in order to also inform the financial market about its ambitions.

Follow-up and evaluation of the monetary policy 2022

Mr. Speaker! In the situation we have, with high inflation, it is important that the fiscal policy is responsible and not so expansive that it risks driving up inflation further. Broad fiscal stimuli could in this situation do more harm than good and counteract the monetary policy that the Riksbank is conducting. The result would be devastating for the country's households. Combating and bringing down inflation is therefore one of the government's most important priorities, and a neutral and somewhat tightening fiscal policy is therefore pursued.

Follow-up and evaluation of the monetary policy 2022

At the same time, we have a responsibility to support the most vulnerable with targeted initiatives. Such initiatives are compatible with both a responsible economic policy and the care for the weakest. The increased and extended supplementary grant for families with children who receive housing allowance, in order to support households with small margins, is a clear expression of this.

In conclusion, I would also like to thank the committee's presidium and members for good cooperation and the office for very good support and the valuable documents we receive. I would also like to take this opportunity to wish the Speaker's presidium and the entire Riksdag Administration a pleasant summer!

(Applause)

The deliberation was hereby concluded.

(Decisions were made under § 11.)

The speech at riksdagen.se, in Swedish (opens in a new tab)