inflation during this period – a short - lived inflationary peak associated with the korean war in 1950−1953, and a longer continuous period from the early 1970s to the 1990s crisis ( see figure 1 ). after the last one in particular, inflation remained low and stable for a long time. figure 1. swedish inflation 1949−2023 annual percentage change source : statistics sweden. the 2022−2024 inflation episode is thus quite unique from a historical perspective. we have to go back more than seventy years to find a similar shortterm inflation peak, although inflation was even higher then. here i am assuming that the current episode of high inflation is indeed coming to an end, and most indications are that this will be the case. it is also unique in that, unlike the two previous episodes of high inflation, this time it was monetary policy that had the main responsibility for fighting inflation in sweden – through the policy of inflation targeting introduced in the early 1990s. in the context of the korean war, the emphasis in the fight against inflation was on regulation and fiscal policy measures, both in sweden and abroad. in the united states, for example, a price and wage freeze was introduced. of course, the 2022−2024 inflation episode also differs markedly from the much longer period of high inflation that preceded the 1990s crisis, often called “ the 3 light at the end of the tunnel – time to start thinking about next time? great inflation ”. there are several reasons why inflation remained so high for so long, but an important one is that overall economic policy systematically became too expansionary. then too, monetary policy played a very limited role, as the interest rate was in principle entirely tied to maintaining the fixed exchange rate. 1 first real test for inflation targeting this recent period of high inflation is likely to be analysed and discussed for a long time to come. but it is likely that one conclusion will be that an important reason why it was so short - lived was that central banks around the world reacted as quickly and simultaneously as they did − although it could be argued that it would have been even better if they had reacted a little earlier. for sweden and many other comparable countries, it has been the first really major test with inflation far above the target during the period of inflation targeting. the challenge was to keep inflation expectations anchored and avoid something like “ the great inflation ” − while doing so without unduly impacting the real economy in terms of a large decline in output and un

variable cpif. the outcome was significantly lower than expected and shorter - term price changes continue to trend downwards. the outcome in april also came in lower than expected at 2. 3 per cent. the swedish economy has slowed down, largely in line with our forecast. there are signs of “ a light at the end of the tunnel ”, but the increased optimism is also likely to be based on expectations of future interest rate cuts. moreover, the improvements in several sectors are taking place from a weak starting position. the labour market has been weakening for some time, and we now see rising unemployment. in my view, one important piece of the inflation assessment puzzle is the continued positive signals we have received regarding companies ’ pricing behaviour. there are now actually slightly fewer companies than normal that are expecting increased sales prices in the retail trade over the next three months. but at the same time, several factors clearly call for caution in monetary policy and these factors primarily revolve around international developments. market expectations of future policy rates and their impact on the krona have fluctuated considerably recently. this is a reminder of the existing uncertainty and that the path to sustainably low and stable inflation is not necessarily straightforward. to this can be added the ongoing geopolitical risks and associated risks for new supply shocks, which could trigger new inflationary impulses in sweden too. large and rapid rate cuts may also lead to a large increase in demand in sweden, which, particularly in combination with a weakened currency, may make inflation rise again. we will keep this in mind when we make monetary policy decisions going forward. we are in a much better position than last year, but we cannot assume the danger has passed. recognising that it is therefore too early to close the book for this period, i would now like to give my view of things so far, and raise a number of issues related to both monetary policy and the property market that i believe are key for the future. a common theme is that a better functioning housing and property market is very important for sweden ’ s future economic stability. 2 light at the end of the tunnel – time to start thinking about next time? the 2022−2024 inflation peak is unique − but could return it can often be useful to put a current event into a historical perspective. i would therefore like to start with a look back at inflation over the last 75 years, from just after the second world war. until very recently, there were two more distinct episodes of high