The role of the euro in Sweden After this glance at what is happening on the euro markets, allow me to turn to the role of the euro in Sweden. I intend to begin with the effect on the securities markets and move on to euroisation and competition. What has the euro meant to the Swedish securities markets so far? My view is that it has so far had relatively little effect. We should remember that developments on these markets are primarily influenced by globalisation and technological developments. And as elsewhere, this has led to frantic activity in consolidation and improving efficiency. Within EMU the introduction of the euro has clearly hastened this process, but in Sweden the euro's influence is of a more indirect nature. The euro market exists as an important alternative, and can thus be said to sharpen competition on the Swedish securities markets through its mere presence. It first and foremost fulfils a need that the krona market cannot completely satisfy. The euro market is perceived as deeper and more liquid, and thus provides an opportunity to borrow large volumes. I am thinking here of, for instance, the large Swedish corporations' need of capital to finance the major structural deals made in recent years. In order to borrow really large volumes, companies like Volvo, Vattenfall and Ericsson have largely turned to the euro market to issue bonds.
Similarly, it reached a turning point in mid-2022, when the other indicators were still rising. That said, the PCCI is based on a complex statistical methodology and the signal provided by its recent changes remains to be confirmed. Along the same lines, indicators that focus on “momentum” and on quarterly rather than annual changes can provide useful additional information in the current phase. At this stage, there are no clear and convergent signs in all of these indicators that would allow us to assert that underlying inflation has indeed reached a turning point. Lastly, we are closely monitoring the changes in wages, which are notably crucial for services inflation. Nominal wage growth is still accelerating across the euro area, although has so far remained below price growth; however, this is not leading to a wage-price spiral beyond what is included in our projections. The inflation expectations of households and businesses As I mentioned in the first part of my speech, market expectations have clearly improved, admittedly against a backdrop of falling energy prices. However, the inflation expectations of economic agents (households and businesses), particularly over the medium term, are also essential as they are the ones that determine the path of prices and wages. These expectations, which traditionally change more slowly than those of the markets, are giving more mixed signals.