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Expected 75 Point Hike in Riksbank Rate

Report: Systematic Strategies

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Stockholm (HedgeNordic) – Sweden’s Riksbank raised the key interest rate by an expected 75 basis points to 2.5 percent, the highest level since 2008. The Swedish central bank hinted at another raise in the policy rate at the beginning of next year in an effort to bring down inflation, with their forecast showing the key rate will be maintained just below 3 percent.

“Inflation is too high and it’s creating problems for many, many households and many, many others,” Riksbank’s Governor Stefan Ingves said at a press conference. “Our judgement right now is that the core rate is going to need to be hiked again at the beginning of next year and will end up somewhere around 3 percent,” added Ingves, who is leaving Sweden’s central bank at the end of the year when his term of office expires after 17 years as governor. “This unusually high inflation that we’ve had demands unusually big increases in the core rate.”

“Our judgement right now is that the core rate is going to need to be hiked again at the beginning of next year and will end up somewhere around 3 percent.”

Thursday’s rate increase follows the 100-point rise in the key interest rate at the end of September, the biggest single increase the Swedish central bank made in 30 years. Riksbank’s Executive Board assessed that monetary policy needed to be tightened more than previously anticipated in September to bring inflation back to the target. Inflation in Sweden slowed to 9.3 percent in October from a 30-year high of 9.7 percent in September, reflecting lower than expected energy prices.

“Disregarding energy prices, inflation has instead been unexpectedly high, which indicates that inflationary pressures are somewhat higher than expected,” according to an announcement by Riksbank. “The risk of the current high inflation will become entrenched is still substantial, and it is very important that monetary policy acts to ensure inflation falls back and stabilises around the target of 2 per cent within a reasonable time.”

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Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com

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