Sweden moving toward stagflation, central bank governor warns

Sweden is showing signs of stagflation and has already begun moving in that direction, the country’s central bank governor Erik Thedéen told public broadcaster SVT on Wednesday.

“The serious concern here is if we see a more persistent rise in inflation,” Thedéen said in an interview with SVT’s 30 minuter programme. He added that while Sweden was not yet in stagflation, “we are moving more in that direction.”

Rising oil, gas, and fertiliser prices would drive inflation higher, he explained, though the exact impact on inflation, GDP, and interest rates remained impossible to predict under current conditions.

Earlier on Wednesday, Prime Minister Ulf Kristersson and Finance Minister Elisabeth Svantesson announced that the conflict in Iran was hitting Sweden’s economy harder than the government had previously anticipated.

“We have moved from a scenario of limited impact on the Swedish economy to a noticeable impact,” Kristersson said at a press briefing.