Sweden unexpectedly lifts key interest rate; flags more hikes as inflation soars
By Frank Prenesti
Date: Thursday 28 Apr 2022
(Sharecast News) - Sweden's central bank on Thursday raised a key interest rate from zero to 0.25%, citing the highest inflation level since the 1990s, and said more hikes would follow.
The Riksbank said there had been "unusually large fluctuations in inflation in Sweden" and the rise last year "was largely due to rapid increases in energy prices." Sweden's inflation rate hit 6.1% last month.
"Since the turn of the year, inflation excluding energy has also risen rapidly and has been significantly higher than the Riksbank's forecast in February," the central bank said in a statement. "The outcomes indicate that the upturn is now broad and prices of goods and food as well as services are rising unusually quickly."
The central bank said the rate would be raised gradually to below 2% in three years' time. Thursday's decision will apply from next Wednesday.
Other European central banks, the Bank of England and US Federal Reserve have raised interest rates as inflation soars worldwide, driven by strong demand following the depths of the Covid-19 pandemic and exacerbated by Russia's war in Ukraine.
"Prices are rising now across the board ... furniture, cars, coffee, bread," Riksbank governor Stefan Ingves told reporters. "When it comes to monetary policy in the coming years, it's all about getting the pace of inflation down to somewhere near 2%."
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