RIKSBANK: Thedeen Re-iterates Cautious Approach To Future MonPol

Riksbank Governor Thedeen's speech summary "On risk, uncertainty and geoeconomic fragmentation" here.  

The excerpt is "It is therefore appropriate to sit tight and wait for more information to get a somewhat clearer view of the inflation and economic outlook"

• It's largely consistent with Thedeen's cautious view in the May minutes, released Wednesday: "The current assessment is somewhat in favour of our next step being a policy rate cut but this is far from certain. For the time being, we will maintain course and speed”."
• Of the Riksbank Executive Board, we view Breman as the most dovish (i.e. most likely to support an earlier cut), followed by Bunge. Meanwhile, Jansson/Thedeen/Seim sit in a more cautious/wait-and-see camp.

A few highlights from the summary:

• In the monetary policy update, the Riksbank assessed that international developments – particularly the elevated uncertainty – are dampening the economic prospects in Sweden. “In turn, this suggests that inflation, beyond the near term, may become lower than in our March forecast. But we also pointed out that there are several risk factors, such as those linked to companies’ global value chains, and that inflation thus could well become unexpectedly high"
• "Fundamentally, there are three approaches for central banks to take towards risk and uncertainty, said Thedéen. You can act cautiously, more forcefully or completely disregard it."
• "I consider that the current situation provides an example of when it is reasonable to apply the conservatism principle. Uncertainty is high and there are several possible scenarios for future inflation developments. It is therefore appropriate to sit tight and wait for more information to get a somewhat clearer view of the inflation and economic outlook"
• "“Our experiences in recent years have taught us that disregarding supply shocks is not self-evident, not least because, in real time, it is very difficult to determine whether a shock is temporary or more long-term".