Sweden raises the interest rate by 1 percent
COPENHAGEN, Denmark – Sweden’s central bank on Tuesday raised its key interest rate by a full percentage point to combat the highest inflation in more than 30 years.
The Riksbank said that inflation has risen rapidly – to 9% in August, the highest level since 1991 – “undermining the purchasing power of households and making it more difficult for both companies and households to plan their finances.”
The bank raised its key interest rate to 1.75% and said it will continue to tighten over the next six months as it tries to bring inflation back to its 2% target. When the Riksbank made the one-point increase, the Riksbank pointed to other central banks’ rapidly rising interest rates as consumer prices rise.
The US central bank’s announcement on Wednesday of a three-quarter point increase in interest rates for the third time in a row was expected to be followed by a similar announcement today from the Bank of England, whose half-point increase last month was the biggest. in 27 years.
“During the pandemic, global imbalances between supply and demand arose,” Sweden’s central bank said. “Russia’s war in Ukraine has further pushed up the prices of several key commodities and created severe disruptions in energy markets in Europe, sending electricity and gas prices to very high levels.”
It added that “the good economic activity in Sweden has also contributed.” Sweden is part of the European Union but does not use the Euro currency, so it is not part of the European Central Bank.