Published 18 January 2023 at 08.00
Economics. Financial analyst Henrik Mitelman at Dagens Industri believes that the Riksbank and the government should deal with today's situation and work to strengthen the krona, which is rapidly losing value in the outside world and is rapidly making Swedes poorer.
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Under Stefan Ingve's leadership, the Riksbank has tried to get inflation up to 2 percent by slavishly following the inflation target that they have set themselves.
According to Mitelman, however, it is not a problem if inflation is 1 percent, except for those who are “religiously” tied to the figure in the inflation target.
“A strong and stable currency is the cornerstone of low and stable inflation. In today's situation, import prices should be moderated and it is of the utmost importance to actually raise our exchange rate”, writes Mitelman in an analysis in Dagens Industri.
According to Mitelman, there are three factors that have led us to accept the constant weakening of the krona.
Firstly, people believe that the Riksbank is obliged to get inflation up to that 2 percent, even though it is only a targets that the Riksbank itself has formulated.
Secondly, there is an overconfidence in the benefits of a weak krona, despite the fact that most companies no longer produce their products in Sweden with only Swedish inputs.
Thirdly, the politicians have been careful not to get involved in currency development, so as not to risk being made suspicious of the view of an independent central bank.
Global inflation has risen sharply, partly because monetary policy has been too loose, partly because production and supplies have been limited.
In Sweden, they have also, voluntarily, created a situation on the electricity market that has accelerated the fall of the krona. To solve this problem, two kinds of efforts are needed according to Mitelman.
Firstly, the Riksbank should declare that it wants to see a stronger krone and stop selling kroner.
Secondly, the government should clarify that it sees a strong krona as a goal for its policy.
A stronger krona would increase our purchasing power and lower inflation. It would also give the government an improvement in opinion polls – because many bourgeois voters feel that the government doesn't get much done, Mietelman believes.