Sweden hikes interest rates
By Abigail Townsend
Date: Tuesday 20 Sep 2022
(Sharecast News) - Sweden's central bank upped interest rates on Tuesday, as it warned that further increases were likely.
The executive board of the Riksbank increased the cost of borrowing by 100 basis points, to 1.75%, after inflation exceeded its last forecast.
The bank said: "Inflation is too high. It is undermining household's purchasing power and making it difficult for both companies and households to plan their finances. Monetary policy now needs to be tightened further, to bring inflation back to the target."
It continued: "The forecast for the policy rate is that it will continue to be raised in the coming six months."
The Riksbank joins a growing list of central banks which are putting up interest rates in a bid to curb surging inflation. The Bank of England has upped the cost of borrowing six times since December, to 1.75%, with another 50 basis point rise expected later this week.
The US Federal Reserve is also forecast to raise rates by another 75 basis points on Wednesday.
In Sweden, inflation rose to 9% in August, the highest since 1991, rocked by "substantial" international cost increases and high energy prices, the Riksbank said. The bank - which has a target of 2% for inflation - last increased the cost of borrowing in June, by 50 basis points.
Neil Wilson, chief market analyst for Markets.com, said: "To highlight how rapidly things have changed, [Sweden's] central bank said at the start of the year that it would not be raising rates until 2024."
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