Sweden’s large interest rate hike follows other central banks
STOCKHOLM (AP) — Sweden’s central bank followed other central banks in implementing a big hike in the key interest rate to fight inflation, saying Thursday that high prices are undermining people’s purchasing power and making it difficult for households and businesses to plan their finances.
The Riksbank said the three-quarters of a percentage point increase pushes the key interest rate up to 2.5 percent – the highest in 14 years, according to Swedish news agency TT – and is intended “to bring down inflation and secure the inflation target”.
Consumer prices rose 9.3% in October from a year earlier in the EU country, lower than the 9.7% seen in September.
The big interest rate hike in Sweden, which does not use the euro currency so it is not part of the European Central Bank’s decision-makingbased on the jumbo full percentage hike made in September.
It comes as the ECBUS Federal Reserve and other central banks have also made big interest rate hikes to fight the inflation that has squeezed people around the world.
In Sweden, “the forecast shows that the policy rate will likely be raised further at the beginning of next year and then be just below 3 percent”, the bank said.
“It is still difficult to assess how inflation will develop and the Riksbank will adjust monetary policy as necessary to ensure that inflation returns to the target within a reasonable time,” the bank said in a statement.
The decision on the key interest rate will apply from 30 November.
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This story has been corrected to show that the 2.5% rate, not the rate hike, is the highest in 14 years.