Sweden's Riksbank published remarks by Deputy Governor Aino Bunge from London, covering the monetary policy outlook and reforms to Sweden’s payments infrastructure. Bunge said inflation has been close to the 2 per cent target and indicators point to it remaining in line, while cautioning that January’s slightly higher-than-expected outcome should be interpreted carefully as the reasons are not yet known. She also emphasised that monetary policy works with a lag and noted the policy rate has been cut by a full percentage point over the past three months, favouring a tentative approach going forward. On the economy, she reiterated that a rebound in Swedish activity is needed for inflation to stay close to target and pointed to early signs, while highlighting foreign-driven uncertainty. Upside inflation risks include a weaker krona, supply shocks, higher producer prices and a return to more volatile pricing behaviour as demand rises, while geopolitical tensions and potential tariffs could weaken export demand and delay investment. On payments, Bunge highlighted upgrades to the RIX system to support instant-payment services via RIX INST, confirmed the Riksbank’s future direction to cooperate with other European central banks and the TARGET system on payment infrastructure and securities settlement, and said more types of financial companies will be able to connect to RIX with effect from April. She also flagged inclusion and resilience challenges in the payments market, including difficulties for some groups as cash is marginalised, rising fraud (especially against the elderly), and dependence on electricity and data communications. The Riksbank’s extended mandate allows it to impose requirements on companies of particular importance for the implementation of payments, alongside ongoing work to improve the availability of offline payments and to advance cross-currency payment improvements with other central banks and expected private-sector involvement.
Riksbank 2025-02-12
Sweden's Riksbank signals tentative policy stance after a full percentage point of rate cuts and sets out RIX and TARGET payments direction
Riksbank Deputy Governor Aino Bunge discussed Sweden's monetary policy, noting inflation near the 2% target but cautioning about January's unexpected rise. She highlighted the need for economic rebound amid foreign uncertainties and detailed upgrades to the RIX system for instant payments and broader connectivity. Bunge also addressed challenges in the payments market, including fraud and reliance on digital infrastructure, and emphasized the Riksbank's extended mandate to enhance payment systems.