The Riksbank spurs the wage negotiations – Swedish Radio

The Riksbank sounds unexpected key rate to remain at minus 0.25 percent. The krona strengthened quickly after the announcement.

– We see good prospects for inflation to rise towards the target of two per cent, says Governor Stefan Ingves.

– We have had an inflation target now for 20 years. It has been a successful strategy for the Swedish economy. You should be a little on the inflation target is met, said Mr Ingves.

The Riksbank did not lower interest rates in the morning, which remains at historically low minus 0.25 percent. And the Riksbank believes in a return to 2 per cent inflation target.

But in the second half of 2016 expected rate slowly increased. At the same time expanded program of purchases of government bonds by a further 40-50 billion. The aim is to drive down interest rates for companies and households.

Now put interest rates off on wage negotiations. In autumn, the social partners to come up with their demands in wage negotiations. And they are very far apart in terms of how to calculate inflation.

How much eat up the wage growth? Nothing, perhaps, inflation’s zero today. Or two per cent, the Riksbank wants it to be? This requires higher pay increases to wages should not be hollowed out.

A percentage of the wage does not sound like much, but in the wage negotiations it is about big money, overall. Employers would expect zero inflation we have now, but the unions adhere to the Riksbank’s target of 2 percent. Karl-Petter Thorvaldsson is LO’s chairman.

– We do not intend to adapt wage negotiations to this low inflation we have had now for the last few years, it would be very dangerous for the Swedish economy. And it is precisely because we should avoid fluctuations, so that if we would have inflation of 3-4 percent, then it is clear that in that case also tvåprocentsinflationen as the basis for our wage.

But the Swedish business think the opposite. Christer Agren is vice president of Swedish Enterprise.

– Now we have figured with two percent inflation in the contract negotiations the last six years without even reaching up to half. I think you still need to have a realistic assessment there. Here it is very much about Swedish companies have a chance to compete so that we can boost production and employment.

Jonas Fredén
jonas.freden@sverigesradio.se