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Swedish Opposition Leader Wants More Debate on Riksbank Policy

Swedish Opposition Leader Wants More Debate on Riksbank Policy

(Bloomberg) -- Swedish opposition leader Ulf Kristersson said politicians should have more freedom to critique the central bank, weighing in as parliament is preparing to release a review of the monetary policy framework later this year.

In an interview Thursday in Stockholm, Kristersson underscored that this would in no way impinge on the central bank’s independence, something he has discussed with Riksbank Governor Stefan Ingves.

Swedish Opposition Leader Wants More Debate on Riksbank Policy

“But it must be accepted to have views on how the Riksbank makes those decisions,” said Kristersson, who heads the conservative Moderate Party. “It’s not a holy grail that you don’t have the right to question.”

Central banks have increasingly come under fire from politicians across the world, with U.S. President Donald Trump famously lashing out at the Federal Reserve on several occasions. Swedish lawmakers, including Finance Minister Magdalena Andersson, have so far refrained from weighing in on monetary policy even amid years of negative interest rates.

Kristersson’s comments come as the legal framework regulating Sweden’s central bank is currently being discussed in a parliamentary review. The ruling Social Democrats are in favor of making it clearer in the law that the Riksbank should take economic growth and employment more into account when setting rates, rather than focusing solely on targeting 2% inflation.

The Moderates aren’t in favor of making any big changes to the current system, Kristersson said, but he still believes that all parties will want to come to a joint conclusion.

“We have been skeptical of changing how the target is formulated,” he said. “I think you need an unambiguous target formulation.”

The Riksbank has also felt the heat from critics, mainly economists, who argue its rigid approach to inflation targeting is stoking imbalances and making Swedes poorer. Policy makers have held rates below zero for more than four years, which has depressed the krona to near record levels.

Kristersson said that the weak krona may have some negative consequences, including potentially making Swedish companies acquisition targets. The question is also whether a “doped” currency may lead to problems later, if businesses fail to make tough choices now.

“I’m concerned that we have such a weak krona,” he said. “There are some things that are problematic with the weak krona, which we should talk more about.”

Kristersson, who failed to form a government after Sweden’s inconclusive election last year when he was abandoned by two of his long-time center-right allies, is now looking ahead to the next vote in three years.

There’s still cooperation between old allies on a more local level, he said, adding that his aim will “always” be to form a center-right government.

“Other parties can decide whether they want to join or not,” he said. “Our planning horizon is completely focused on forming a better government in 2022.”

To contact the reporter on this story: Amanda Billner in Stockholm at abillner@bloomberg.net

To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net, Stephen Treloar

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