now we have reason to place great emphasis on this point. there are question marks over whether and when the turnaround in the swedish economy will come and how strong the recovery will be once it takes off. in addition, there is considerable uncertainty about global developments, not least the impact of the change of president in the united states on the us economy, the international economy and the geopolitical situation. the riksbank will monitor developments closely and we are prepared to adjust monetary policy if necessary to ensure inflation around 2 per cent in the long term. longer - term developments – productivity a key factor a question often raised in the debate is where monetary policy and the economy as a whole are heading in the long term. this is partly due to the uncertainty i mentioned earlier but there are also a number of challenges that will characterise the environment in which monetary policy is to operate. there is currently a strong focus on europe's future competitiveness, including ongoing discussions on the so - called draghi report and its conclusions on the eu's lack of innovative capacity, low productivity and strategic dependence on the united states and china in several areas. 1 productivity determines how efficiently resources in the economy are transformed into goods and services and is one of the most important determinants of material wellbeing in the long run – the rate of increase in gdp per capita is largely determined by the rate of increase in productivity. many countries in the eu have high levels of public debt and, with stagnating gdp growth, there is a risk that debt will eventually become unsustainable. in turn, this could mean that the priorities that must then be set will be at the expense of the green transition, for example. to meet the challenges, the report estimates that additional investment equivalent to 5 per cent of gdp is needed each year over a five - year period. it makes no distinction between private and public investment but notes that historically about 80 per cent has been private and 20 per cent public. the report proposes a large number of concrete measures to boost productivity and competitiveness, including reducing the regulatory burden for small and medium - sized enterprises and the implementation by the eu of the long - discussed capital markets 3 / 5 bis - central bankers'speeches union. it is also interesting to note that a fact box highlights sweden as a role model in the financial market area. the box describes how sweden has created a deep capital market with a high level of participation by private individuals and how this model has resulted in

erik thedeen : monetary policy in recent years and key issues ahead speech by mr erik thedeen, governor of the sveriges riksbank, at danske bank, stockholm, 22 november 2024. * * * thank you for the invitation! today, i would like to start by looking back at the past few years – years that have been eventful from a monetary policy perspective, to put it mildly. i shall then go on to discuss the riksbank's latest interest rate decision. finally, i would like to widen my view and discuss the environment in which monetary policy will operate in the long run. several factors behind the rapid rise in inflation the starting point for the rise in inflation was the pandemic in 2020 and the shock to the economy that the spread of infection and the measures to contain it caused. gdp fell sharply and redundancy notices rose to record levels as companies'supply chains broke down and production and consumption stalled. there were also major fluctuations as some consumption first virtually stopped and then rapidly increased again as the economy started to recover. for sweden, this recovery proved to be faster than after other crises. demand was strong not only in the swedish economy but also globally. this contributed to a rapid rise in commodity prices in 2021 and a significant increase in freight prices when global trade adjusted after the pandemic. in addition, various supply shocks also contributed to the rapid rise in inflation. in 2021, energy prices, in particular electricity prices, started to increase rapidly. when russia invaded ukraine in early 2022, inflation received an extra boost as energy and food prices rose even more. after a time, services prices also increased and, by early 2023, more than 8 out of 10 prices in the cpif basket were increasing by more than 4 per cent. thus there was a broad and sharp rise in prices. that firms started to pass on their increased costs to consumer prices to such a large extent was probably a result of the succession of large cost increases and the large pent - up need to consume among households. higher prices may also have become more acceptable – both among firms, who saw that other firms were able to raise their prices more, and among households, who realised that firms were in a vulnerable position after the pandemic. unexpectedly high resilience despite large impact on interest rate sensitiveparts of the economy cpif inflation rose from 4 per cent at the beginning of 2022 to peak at just above 10 per cent in december