Göran Hjelm: Economic-Policy Interaction as a Strength for the Swedish Economy

Deputy Governor Göran Hjelm argues that clear communication and strong interaction with fiscal policy and wage formation are essential tools for the Riksbank to manage supply-driven inflation. He advocates for a flexible approach that looks through temporary inflation spikes caused by supply shocks, provided the central bank maintains credibility and strict adherence to its inflation target. Hjelm emphasizes that this coordinated strategy enhances the Riksbank's operational freedom while ensuring long-term price stability and robust economic development.

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Speech
Communication and interaction are important tools for monetary policy. Göran Hjelm emphasized this in his first speech as Deputy Governor. He sees a significant risk of further major supply disruptions ahead but also stated that Sweden is well prepared for the challenges. He attributes a central role to fiscal policy and wage formation in this regard.

2026-05-22

Göran Hjelm: My View on Monetary Policy in an Uncertain World

Date:

2026-05-22 08:00

Speaker:

Deputy Governor Göran Hjelm

Location:

Sveriges Riksbank, Brunkebergstorg 11

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Published

2026-05-22

"We have seen recurring, large disruptions to the supply of goods and services, which have often been followed by high inflation and dampened real economic development. There is a significant risk that we will see more such disruptions, including climate-related supply disruptions, in the future." This is how Hjelm began his speech at Brunkebergstorg, where he presented his view on the monetary policy trade-offs the Riksbank faces.

He stated that he shares the Riksbank's assessment that it was necessary to clearly tighten monetary policy in 2022 and 2023. However, when supply disruptions drive up inflation while simultaneously dampening real economic development, Hjelm argues that it is appropriate to "look through" elevated inflation as much as possible. This does, however, require clearly and credibly explaining why monetary policy reacts less than normal.

"Clear communication from the Riksbank is particularly important to limit the need for tightening in the face of supply-driven inflation, and it also promotes interaction with fiscal policy and wage formation."

This interaction, Hjelm argued, functioned well during the years of high inflation and contributed to monetary policy being able to take the real economic development into greater account. He therefore welcomes further steps by the Riksbank to strengthen this in the future.

"This gives the Riksbank greater freedom of action, which should be used to achieve better economic outcomes. However, it is freedom under responsibility. In the event of extensive supply disruptions, monetary policy should clearly tighten so that price and wage setters do not lose confidence in the inflation target. Maintaining persistently low and stable inflation is the Riksbank's overriding goal in all situations and a cornerstone for good economic development."