It is the Riksbank's task to stabilise inflation around 2 per cent and we have assessed that it is better to act with monetary policy than to wait and see and risk being surprised by continued high inflation that requires even greater tightening later on. 5/10  BIS - Central bankers' speeches  Inflation thus needs to fall clearly this year, and it is important that underlying inflation also falls. We assessed in February that the interest rate needed to be raised and that we will probably need to raise it in April as well. As usual, it is the outlook for the economy and inflation that is decisive for monetary policy, and we are well aware that it takes time for the Riksbank's policy rate increases to have a full impact on the economy. As it is difficult to know how quickly the impact will be and how great the effects of the increases will be on the real economy and inflation, it is still important to follow new outcomes and new indicators to obtain a picture of inflation prospects. Inflation has already started to decline in some countries, but as we noted in February, we see few signs that underlying inflation has started to decline in Sweden. Nor has this picture been changed by the new information on inflation that has come in since our decision. On the contrary. In February, inflation excluding energy prices rose and the outcome was significantly above our latest assessment.
Too high inflation and great uncertainty about developments We have a year behind us in which inflation rose sharply around the world and central banks raised policy rates at a rapid pace. At the beginning of 2022, inflation was around 4 per cent in Sweden. The Riksbank and most forecasters assessed that inflation would fall during the year. As we know, it continued to rise instead. One reason was the rapid economic recovery from the coronavirus crisis, which pushed up prices on commodities, inputs and transport. Household demand was high, while it was difficult for businesses to adjust and increase production quickly enough. As a result, inflation received an unexpected boost when economies opened up. Another important reason was Russia's invasion of Ukraine, which drove up the prices of energy and grain, as well as other agricultural products. In addition, the high energy prices had indirect effects on inflation via, for instance, rising prices for transports and other input goods for companies. In the context of high demand following the pandemic, firms found it easier to pass on their increased costs to consumer prices than might have been expected from previous experience. One year later, at the beginning of 2023, we thus had both far too high inflation and the lesson from last year that it is very difficult to know how inflation will develop. There are many indications that inflation in Sweden, as well as abroad, will fall back in 2023.