Sweden’s Riksbank on Thursday became the world’s last central bank to raise interest rates, making a move of 50 basis points, citing the rapid spread of inflation.
The Riksbank raised the policy rate from 0.25% to 0.75%, a move that was largely expected, and expects further increases, bringing the rate closer to 2% early next year. Asset holdings will also “shrink faster than was decided in April,” he said.
The Swedish central bank said the increase comes to ensure that inflation returns to its target and does not “warm up” in the economy. “Inflation has continued to rise rapidly and price increases are spreading across the economy,” the bank said. “There have been severe fluctuations in inflation and the inflation outlook is uncertain.”
The Riksbank expects consumer prices in the country to average 7.6% in 2022, compared to its April forecast of 6%, and 7.1% in 2023, above its previous forecast of 5%.
The euro remained largely stable against the Swedish krona EURSEK,
after the decision, to 10,683 crowns.
The Federal Reserve raised interest rates this month by 75 basis points, and the Swiss National Bank raised interest rates by half a point. The European Central Bank expects to raise rates by a quarter of a point next month, with another rise in September.