A black swan – therefore the Riksbank was wrong

Ingves on the economy's war shock: "A black swan came flying"

 Of: 

 

Josefine Karlsson 

 

Published: Less than 2 hours ago 

 

Updated: Less than 20 min ago 

 

Stefan Ingves 

 

The Riksbank's forecast in January was completely wrong. 

 

According to Stefan Ingves, the war came flying into the world economy like "a black swan". 

 

He emphasizes that the current forecast may not be correct either. 

 

- I think we humans are constructed in our heads that we would like to believe that something is very, very safe, even though it is not, he says in SVT:s ”30 minuter”.

 

A few weeks before the war, Riksbank Governor Stefan Ingves stood and presented the Riksbank's interest rate forecast. Zero interest until 2024 and ongoing high inflation that would fall during the year. 

 

That was not the case. Not even close. 

 

- It captures the difficulty with forecasts. What people in my industry call "a black swan flying". That is, something unforeseen that you have not managed to predict. Then you have to reconsider everything, which we did, he says in SVT:s program ”30 minuter”.

 

Defending the misjudgment last winter 

 

He defends the Riksbank's assessment at the time and points out that "the world became completely different". 

 

The Riksbank's current forecast is that the now high inflation will fall rapidly next year, but it will take "a few years" before it is back to the target of 2 percent. 

 

How high the interest rate will be is difficult to predict, according to Ingves. But the Riksbank's current assessment is an increase of around 2.5 percent starting next year and that the mortgage rate will end up at 4 percent. 

 

- But it is very important to remember that we are dependent on what will happen in the rest of the world. So that is our best assessment at the moment, and that assumes that inflation will come down, he says. 

 

Stefan Ingves. Photo: Margareta Bloom Sandebäck 

 

Uncertain forecasts 

 

But can Stefan Ingve's and the Riksbank's forecasts be trusted, since they were just so wrong? He says himself that he makes no promises and emphasizes that the uncertainty is great and that you have to "accept uncertainty in these contexts". 

 

SVT: Do you always have to take what you say with a grain of salt? 

 

- Yes, in the sense that if you look and read carefully in our formal reports, it is very clear that we are trying to communicate this with uncertainty, he says. 

 

Abolished amortization requirement is a "free lunch" 

 

Stefan Ingves says in the program that Swedish households' high mortgages mean that the world has its eyes on Sweden and that it is a bad idea to propose scrapping or pausing amortization requirements. He equates it to looking for a "free lunch" and that it usually leads to bigger problems in the long run. 

 

If the government implements the proposal, it indicates the Riksbank will raise the interest rate, Ingves believes. 

 

- As soon as it receives a little, you shouldn't have to pay off your loans, it's a bad idea and it can cost a lot. We have a need to bring down inflation and then we raise the interest rate. If you start to compensate for that by changing the amortizations at the same time, then you counteract the monetary policy and then you are almost asking for even higher interest rate increases, he says.