– Does not go so far as to say that Norway is unwise – NRK Norway – Overview of news from different parts of the country

Théeden has this week given the Swedes a long-awaited interest rate cut. And not only that, he signals two further cuts before the end of the year. Here at home, we may have to wait until next year before that can happen.

NRK has conducted a longer interview with the governor of the Swedish central bank 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 have interpreted it high interest rates. What do you think is the big difference?

– One thing is the labor market, which seems to be even stronger in Norway. Another thing is that wages are increasing more in Norway. I think that is a fairly important factor, says Riksbank Governor Théeden.

• More people are unemployed in Sweden than in Norway: The unemployment rate in Sweden is 8.3 per cent, while in Norway it is around 3.9 per cent, according to figures from the Statistics Agency.

• Last year, the Swedish trade unions agreed to a wage settlement that gave them weakened purchasing power: The Swedish front-line profession agreed to a two-year agreement, agreeing to a salary increase of 4.1 percent last year and 3.3 percent this year. In comparison, the frontline subject in Norway both this year and last year was 5.2 per cent. In kroner, the different salary growth means that Norwegians with 600,000 in annual salary two years ago have had 19,000 kroner more to work with than Swedes with the same salary.

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

– What is in the framework, and which we have discussed since the 70s in Sweden, is that there is no point in chasing prices with wages. The only thing it contributes to is that the prices go up even more, and thus you haven’t won anything after all. Then it is better to get real wage week when the prices have come down, Théeden says.

– It is both forward-looking and something I think is very positive, and a sign that the inflation target have high hopes, that one believes inflation will come down, despite the fact that it was up to 10 per cent.

I think Sweden is a role model

On the eve of 2022, price growth in Sweden was over 10 per cent.

– In an interview with SVT, you compared the wage development in Norway and Sweden, and called the Swedish development wise. Isn’t that wise, in Norway?

– If you do not get a salary development that is in line with the inflation target, then it will be harder to reach the inflation target. It’s pure mathematics to me. In a long-term perspective, I think the Swedish model is very wise and healthy. It is better than having far too high wages that only drive up prices, so that there is no real pay week.

– Right here, I think Sweden is a role model for many others, but I don’t go so far as to say that Norway is unwise.

– The world’s strongest economy, Norway

As in Norway, there are also many in Sweden who are scratching their heads over what is causing the Swedish krona to be so weak.

Riksbank Governor Théeden spent a lot of time comparing the Swedish and the Norwegian krone for those present at the press conference after the interest rate decision on Wednesday.

Historically, Norwegians have been used to the fact that the Swedish krona has been slightly weaker than the Norwegian one, and that it has therefore been nice to be a Norwegian trading in Sweden. But now the exchange rate is almost the same.

Théeden often uses the Norwegian krone to defend itself in the Swedish krone debate.

– I usually go so far as to say that if the world’s strongest economy, Norway, roughly speaking, has as weak an exchange rate as Sweden, then we have to look for answers elsewhere than what often appears in the Swedish debate, says Riksbank governor Théeden.

Well away the krone

In Norway, many people blame the government’s policies as one of several reasons why the Norwegian krone is weak.

In the Swedish debate, there are also many who blame domestic factors, explains the Governor of the Riksbank. For example, that it must be the Riksbank’s fault, that the property sector is doing badly, that Sweden had not joined the NATO defense alliance, or that there is a lot of gang crime there.

– Many of these factors are very important, but if they had been decisive for the Swedish krona, then the Norwegian krona should not have been as weak. That has been my simple analysis, Théeden says.

– The answer to why both the Swedish and the Norwegian krone are so weak is something that must be found elsewhere.

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

– We simply cannot act like this

– In Norway, people are talking about not being able to lower interest rates until we see that the European or American central bank does so – precisely because it could weaken the krone further. But you’re not afraid of the krone exchange rate, are you?

– The exchange rate of the krone is a concern for inflation, but it does not mean that we throw our inflation forecasts out of the window. We believe that we will reach the target of 2 percent inflation and that we will stay there. If inflation goes down and the krona is really weak, it is not the case that we cannot lower interest rates to save the krona. We simply cannot act like this, says Théeden.

– But it is clear that the krone exchange rate is worrying, also for the structure of the Swedish economy in the long term.

– Precisely the headache the weak krona gives, does it make it relevant for Sweden to introduce the euro?

– It is not a decision we are involved in, but a political decision. But there can be a discussion about it, but it must be at a political level, says Théeden.

There are now more and more Swedes who want to introduce the euro, shows a recent survey carried out by the University of Gothenburg. In Norway, too, there are some who are advocating the introduction of the euro – or tying the Norwegian krone exchange rate to the euro.