Expensive Times: How to Fight Inflation in Sweden

Executive Summary

Inflation policy in Dyrtider challenges Sweden’s status quo. Elinor Odeberg contends that Sweden’s response to the recent inflation surge has been dominated by central banking orthodoxy. The Riksbank has led with rapid and steep interest rate hikes, while political actors remained largely passive. Odeberg argues this approach places excessive burden on wage-earners and risked deep economic pain without addressing the root causes of price pressures.

The central bank’s power has grown too unchecked. Odeberg traces how over recent decades the Riksbank has become insulated from democratic constraints, giving it a de facto monopoly over inflation policy. Without political counterbalance, the bank’s aggressive rate path reinforces inequality: when households bear the pain and profits remain high, inflation becomes a question of distribution and institutional design — not just monetary mechanics.

Fiscal alternatives exist and are necessary. Rather than treating inflation as a purely monetary problem, Odeberg presents proposals that reorient the policy mix: prioritize public investment in energy, housing, and infrastructure; adopt reforms to enhance market resilience; and align fiscal policy with full employment. She argues that inflation should not be fought by weakening workers but by rethinking the structural foundations of the economy.

Political will and institutional reform are critical. For Odeberg, the real shift needed is democratic: fiscal institutions must reclaim authority, monetary policy must be held accountable, and government must use its tools proactively. Only by rebalancing the interplay between fiscal and monetary spheres can inflation be contained without social harm.