However, in a highly volatile environment, the war is affecting the cost of these goods on global markets, irrespective of their origin. In particular, the rise in energy prices has significant effects on the cost of the household consumption basket and on firms’ costs of production. Also, the war itself could ultimately hamper the supply of some of these goods, which would obviously tend to have a large impact on prices and economic activity. The European authorities have formally announced their intention to reduce structural energy dependence on Russia, but clearly this is not something that can be achieved in the short term. The surge in inflationary pressures apparent in the March data partly reflects the increase in commodity prices associated with the war, but also the delayed effects of the acceleration in intermediate costs in the preceding months on the prices of other goods and services, and the scarcity of certain products as a result of the road hauliers’ strike. The impact of the increase in energy costs is highly uneven across groups of agents. In the case of households, those with low incomes are most affected. In the case of productive sectors, the impact is naturally greater on the more energy-intensive ones. A second channel, that is also very significant, is the impact of the war on household and business confidence, given the extraordinary uncertainty surrounding the duration and course of the war.
11 But the proposal presented by the committee still entailed a fairly unclear allocation of responsibility and the Riksbank assessed in its consultation response that this could lead to uncertainty over who should take action and thus weaken decisiveness too far. 12 We advocated that responsibility should be given to one decision-making body with a clear responsibility for macroprudential policy. A few weeks ago, the Government came to a decision. 13 Many details still remain to be decided, and it will take some time still before a complete framework is in place. But it is clear that Finansinspektionen (the Swedish Financial Supervisory Authority) will have the overall responsibility for macroprudential tools. The Riksbank will be part of a financial stability council that also includes the Government, Finansinspektionen and the National Debt Office. The council is to identify risks and discuss measures, but it should function as a discussion forum and not give explicit recommendations. The most important thing is that the uncertainty surrounding the allocation of responsibility has now been resolved in that it has been made clear and that responsibility will rest with one authority. I do not believe that the institutional set-up is otherwise of absolutely critical importance – within reasonable boundaries. Various solutions may very well prove to function equally well in practice and provide equally good economic development. Ultimately, it remains to be seen how things work out – “the proof of the pudding is in the eating”.