– Doesn't go so far as to say that Norway is unwise – NRK Norway – An overview of news from different parts of the country

– Doesn't go so far as to say that Norway is unwise – NRK Norway – An overview of news from different parts of the country

Théeden this week gave the Swedes a long-awaited interest rate cut. Not only that, but he indicated two additional cuts before the end of the year. Here at home, we may have to wait until next year before that happens.

NRK conducted a longer interview with the Governor of the Riksbank to understand what separates us from our neighboring country.

– There is no point in chasing prices with salaries

– There are big differences between how the Norwegian and Swedish people and the economy interpret it High interest rates. What do you think is the big difference?

-One thing is the job market, which seems to be stronger in Norway. Another thing is that wages are increasing more in Norway. I think this is a fairly important factor, says Riksbank Governor Theden.

  • The number of unemployed in Sweden is greater than the number of unemployed in Norway: The unemployment rate in Sweden is 8.3 percent, while in Norway it is about 3.9 percent, according to statistics agency figures.

  • Last year, Swedish trade unions agreed to a wage settlement that weakened purchasing power: The Swedish frontline profession agreed to a two-year deal, agreeing to pay increases of 4.1 per cent last year and 3.3 per cent this year. In comparison, Norway's frontline theme this year and last year was 5.2 percent. In krone, the difference in salary growth means that Norwegians who were earning an annual salary of 600,000 kroner two years ago had 19,000 kroner more to work than Swedes with the same salary.

See also  - Everyone is wondering when the interest rate will be cut - E24

– What makes the Swedes agree to such weak wage settlements?

– What is in the framework, and which we have discussed since the 1970s in Sweden, is that there is no point in chasing prices with wages. The only thing that contributes to this is that prices rise even more, so you don't win anything at all. Then it is better to get it Real wage week When prices fall, Theiden says.

– It is forward-looking, which I think is very positive, and evidence of that Inflation target We have high hopes that one believes that inflation will come down, even though it has reached 10 percent.

Just look at our neighboring country: – Our wage development for low inflation is much greater than in other countries. “Just look at our neighbor Norway, wages are higher there and it looks like interest rate cuts will continue for a bit,” Theden told SVT.

Photo: Ragnhild Vardal/NRK

I think Sweden is a role model

On the eve of 2022, price growth in Sweden has reached more than 10 percent.

– I Interview with SVT She compared the wage development in Norway and Sweden, and described the Swedish development as wise. Isn't this wise in Norway?

– If you do not get a salary increase that is in line with the inflation target, it will be difficult to reach the inflation target. It's pure mathematics for me. From a long-term perspective, I think the Swedish model is very wise and healthy. It's better than having wages that are so high that only drives up prices, so that there is no real pay week.

– Here, I think that Sweden is a role model for many other countries, but I do not go so far as to say that Norway is unwise.

– The strongest economy in the world is Norway

As in Norway, there are also many in Sweden who wonder why the Swedish Krona is so weak.

Riksbank Governor Theden spent a lot of time comparing the Swedish krona and the Norwegian krone to attendees at the press conference after Wednesday's interest rate decision.

Historically, Norwegians were used to the fact that the Swedish Krona was a little weaker than the Norwegian Krone, so it was nice to have a Norwegian trading in Sweden. But now the exchange rate is almost the same.

Théeden often uses the Norwegian krone to defend himself in the Swedish krona controversy.

– I usually go so far as to say that if the most powerful economy in the world, Norway, in general, has a weak exchange rate like Sweden, then we have to look for answers elsewhere than what often appears in the Swedish debate, says the central bank governor. Swedish. Theden.


Well away the krone

In Norway, many people blame government policies as one of the many reasons why the Norwegian Krone is weak.

In the Swedish debate, there are also many who blame internal factors, as the governor of the Riksbank explains. For example, it must be the Riksbank's fault, or the real estate sector is doing poorly, or Sweden has not joined the defense NATO, or there is a lot of gang crime there.

– Many of these factors are very important, but if they are decisive for the Swedish Krona, the Norwegian Krona should not be weak. This was my simple analysis says Theden.

Riksbank Governor Erik Theden after the interest rate meeting on May 8.

Teden believes that the Swedish interest rate cut this week will only lead to a limited and short-term weakening of the Swedish krona.

Photo: Ragnhild Vardal/NRK

The answer to why both the Swedish and Norwegian krone is so weak will have to be found elsewhere.

Among other things, he points to the fact that many people are instead investing their money in foreign currencies, and in Sweden, which is a small country in the grand scheme of things.

-We simply cannot act this way

– In Norway, people are talking about not being able to lower interest rates until we see the European or US Central Bank do so – precisely because it might weaken the krone further. But you're not afraid of the krone exchange rate, are you?

The krone exchange rate is a concern for inflation, but this does not mean that we throw our inflation expectations out the window. We believe that we will reach the inflation target of 2% and will remain at this level. If inflation falls and the krona becomes really weak, it is not that we cannot lower interest rates to save the krona. “We simply cannot act like this,” Theden says.

But it is clear that the krone exchange rate is a concern, as well as the long-term structure of the Swedish economy.

– Specifically, the headache caused by the weak krona, does it make it appropriate for Sweden to introduce the euro?

– This is not a decision we are involved in, but rather a political decision. But there can be a debate about it, but it has to be at the political level, says Theden.

There are now more and more Swedes who want to introduce the euro, and this is showing up in a new way Survey conducted by the University of Gothenburg. Also in Norway There are some who speak out To enter the euro – or link the exchange rate of the Norwegian krone to the euro.



10.05.2024 at 13.31

Dalila Awolowo

Dalila Awolowo

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