Sweden’s Riksbank offered a 100 basis point increase in interest rates on Tuesday as it looks to curb inflation.
Mikael Sjoberg / Bloomberg via Getty Images
Sweden’s Riksbank on Tuesday offered a 100 basis point increase in interest rates, bringing its main policy rate to 1.75%, as it warned that “inflation is too high. “
In a statement, the central bank said soaring inflation was “undermining the purchasing power of households and making it more difficult for both companies and households to plan their finances. “
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A strong increase occurs when US Federal Reserve kick off the two-day monetary policy meeting, with markets widely expecting a 75 basis point gain as policymakers try to control soaring prices.
The Riksbank said monetary policy would need to be tightened further to bring inflation back to its 2% target and forecast interest rates would continue to rise over the next six months.
“Future evolution of inflation remains difficult to gauge and the Riksbank will adjust monetary policy as necessary to ensure that inflation is brought back to target,” it said.
Although global factors such as imbalances left over from the Covid-19 pandemic and soaring energy prices due to Russia’s war in Ukraine have sent prices soaring, Riksbank executives said the operation The strong economy in Sweden also contributes to that.
Sweden’s consumer price inflation rose to 9% annually in August, its highest level since 1991 and topped the Riksbank’s previous forecast in June.
“Rising prices and higher interest costs are being felt by households and firms, and many households will have a significantly higher cost of living,” said Riksbank.
“However, it will be even more painful for Swedish households and the economy as a whole if inflation remains as high as it is today.”
The comments echo recent lines from Fed Chairman Jerome Powell, who said the US economy will need to face “some pain” to prevent inflation from causing more lasting damage.
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