The Governor of the Riksbank: The war means that we need to raise interest rates earlier

Both factors lead to rising prices and inflation is well above the Riksbank's forecasts.

- We simply have to recalculate, the end result of which will probably be that the interest rate will be raised earlier than we expected, says Stefan Ingves, who does not want to specify exactly when. 

Russia's invasion of Ukraine is likely to continue to drive global inflation.

- The war, together with the sanctions from the West, will probably lead to a negative supply shock, says Daan Struyven, senior global economist at Goldman Sachs.

Production in Ukraine and Russia has fallen sharply.

So does trade between countries and the rest of the world.

Although Russia is a relatively small player in the world economy as a whole, the country is a significant player in the commodity market.

When you reduce trade with a country that imports more than it exports, it means that the rest of the world needs to produce a larger share of what is consumed, according to Daan Struyven.

- It will probably exacerbate the imbalance between supply and demand that underlies the global rise in inflation.

Risk of stagflation

US investment bank Goldman Sachs has downgraded its forecasts for global growth.

Higher commodity prices, reduced industrial activity due to higher gas prices and declines in the stock market.

- Broadly speaking, we are facing a stagflation shock, with higher inflation and lower growth, says Daan Struyven.

Central banks face a difficult trade-off between supporting the economy when growth slows, or preventing inflation from skyrocketing.

- It is important to remember that we have had low and stable inflation over the past 20-30 years.

Now the pandemic and the war on top of it have increased the risk that underlying inflation and inflation expectations will rise to dangerous levels.

He still believes that the central banks will tighten monetary policy to curb inflation, unless growth takes a real hit and there is a threat of recession.

"Surely a notch in the curve"

- Before all this happened, our assessment was that there will be good times in the Swedish economy for the foreseeable future, says Stefan Ingves.

Now that uncertainty is increasing, it looks like growth will slow down somewhat in the short term.

But in the long run, there is no reason to believe that it will last, according to the Governor of the Riksbank.

Above all, it has to do with the fact that the Swedish economy is not particularly dependent on either Russia or Ukraine.

- The Swedish economy is dependent on the euro area and the world economy in a broad sense.

But certainly so that there will be a notch in the cube in the near future, says Stefan Ingves.

Do not miss the whole Ekonomibyrån: Get ready for "Putin prices" on SVT Play.