Sweden announces biggest interest rate hike in three decades | News
On Tuesday, Sweden’s central bank, the Riksbank, announced its biggest rate hike in nearly three decades, raising it by 100 basis points to 1.75 percent to curb rising inflation.
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It is the third increase in a row after the Riksbank’s declaration in February that the policy rate would remain at zero percent until 2024. In April, the policy rate was raised to 0.25 percent and then in June to 0.75 percent.
“Inflation is far too high and it creates problems for households and companies and then we have to act on monetary policy,” said Riksbank Governor Stefan Ingves, adding that Swedes can expect further interest rate increases in the coming six months.
He also mentioned that it was difficult to predict the trajectory of inflation, due to world events creating a volatile market.
– We can only regret that it took some time before we realized what was happening in the Swedish economy, says Ingves.
Inflation Rate:
����Australia: 6.1%
����Norway: 6.5%
����Canada: 7.0%
����USA: 8.3%
����Denmark: 8.9%
����EU: 9.1%
����Sweden: 9.8%
����Great Britain: 9.9%Central bank rates:
����Australia: 2.35%
����Norway: 1.75%
����Canada: 3.25%
����USA: 2.375%
����Denmark: 0.65%
����EU: 0.75%
����Sweden: 1.75%
����UK: 1.75% pic.twitter.com/ocuIvXLE6Q— Profiniki (@ProFiniki_en)
September 20, 2022
“The Riksbank was late in seeing inflation coming, that is why you are now forced to pull the emergency brake and try to stop the train as quickly as possible… Maybe a little too quickly, because this goes directly against what a central bank is supposed to do,” says Alexander Noren, Swedish Television’s economic commentator.
Tuesday’s rate hike was expected and the hike is believed to continue as inflation continues to soar, Sveriges Television reported, adding that economists expect the key rate to reach 3.5 percent next summer.
According to the Riksbank’s forecasts, Sweden’s gross domestic product (GDP) will grow by 2.7 percent this year and shrink by 0.7 percent next year. Sweden’s inflation rate hit a new three-decade high in August, with fixed-rate consumer price index (KPIF) 12-month inflation reaching 9 percent, up from 8 percent in July.