Swedish Central Bank Announces Key Interest Rate Hike, More to Come in 2022

The Swedish central bank increased its key interest rate by 25 basis points to 0.25% on Thursday, and announced that more interest rate hikes will be implemented later this year.

As per Reuters, the Riksbank has opted to institute sweeping changes, namely an aggressive monetary policy outlook, as the price surge continues to climb stemming from soaring inflation. This comes after the central bank, in February, expected the price increase to be temporary with the need to institute potential interest rate hikes not arising until 2024. However, Russia’s invasion of Ukraine in late February sparked a surge in commodity costs, adding to the already dire situation posed by soaring pandemic-induced inflation.

In a statement, the Riksbank said, "The Board's forecast is that the repo rate will be raised gradually going forward and that it will be somewhat below 2 per cent in three years' time." This comes after inflation rose to 6.1% in March, far exceeding the central bank’s target of 2%, reported Reuters.

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