Sweden’s Riksbank raises its policy rate to 2 per cent
Sweden’s Riksbank has raised its policy rate by 0.25 percentage points to 2 per cent, effective from 11 November. The central bank cited stronger economic activity, supply disruptions and a weaker krona in its inflation outlook. Further increases in the coming year remain likely if its assessment of inflation and economic activity holds. September fixed-interest consumer inflation was 1.5 per cent.
Economics & Markets··Evening
The new rate takes effect on 11 November
Sweden’s central bank, Riksbank, has raised its policy rate by 0.25 percentage points to 2 per cent.[1], [2]
The decision announced on 4 November applies from 11 November. The bank linked its move to stronger economic activity and cost increases from supply disruptions. It also said this year’s weaker krona was contributing to its inflation outlook. Further increases in the coming year are likely if the outlook for inflation and activity holds, consistent with its September rate forecast.[1]
September inflation differs across measures
Consumer inflation measured with a fixed mortgage interest rate, known as CPIF, was 1.5 per cent in September, matching the bank’s forecast. Removing the direct effects of temporary fiscal measures put the rate at 3 per cent. Also excluding energy gave a reading of 1.6 per cent, slightly below expectations. The bank regards that last measure as the best current reflection of underlying inflation, while other indicators still suggest above-normal cost pressures.[1]
Supply risks accompany a stronger economy
Riksbank identified supply disruptions and higher energy prices among upward inflation risks. Preliminary data showed gains in output and employment, but the strength of the labour-market recovery remains uncertain. Household sentiment weakened in October as business sentiment improved. The current update contains no new forecasts; meeting minutes are due on 10 November and the next forecast-bearing report on 16 December.[1]
