STOCKHOLM (Reuters) – Swedish Central Bank Deputy Governor Martin Floden is set to get a new term when his mandate expires in May, with a formal decision likely on Friday, three sources with knowledge of the matter told Reuters.
Considered one of the more hawkish members on the six-person rate-setting board, Floden’s vote could tilt the balance towards the Riksbank’s beginning to raise interest rates for first time since 2011.
The parliament-appointed Riksbank General Council informally agreed on Feb. 9 to renew Floden’s mandate and is likely to take the formal decision when it meets on Friday, the sources said.
Susanne Eberstein, chairwoman of the General Council, declined to comment. The Riksbank also declined to comment.
The Swedish central bank has been among the most aggressive central banks around the world, betting that negative rates and a hefty bond-buying program would lift inflation by weakening Sweden’s currency, the crown.
That seems to have largely succeeded, with inflation at or around the 2 percent target for most of last year. The question now is when to start normalizing monetary policy, with the official forecast being a first rate hike in the second half of this year.
Both Floden and Deputy Governor Henry Ohlsson dissented against a decision in December to bring forward the reinvestment of maturing bonds, effectively making policy more expansionary this year. Ohlsson was alone in entering a reservation against this week’s decision to keep the key repo rate on hold at -0.50 percent. He wanted an immediate hike.
Reaching political agreement over new candidates has proved difficult and was a key factor in the renewal of Governor Stefan Ingves’ mandate last year, potentially extending his tenure to 17 years.
Mandates are normally extended by five or six years, but it was not clear for how long Floden’s term at the Riksbank would be extended.
(Reporting by Daniel Dickson and Johan Sennero; editing Niklas Pollard, Larry King)