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Riksbank Sees Rate Hikes On The Horizon

By RTTNews Staff Writer   ✉   | Published:   | Follow Us On Google News
rttnewslogo20mar2024 lt

Sweden's central bank said on Wednesday that it is set to raise interest rates at the end of this year or early next year, as inflation is on target and economic activity remains strong.

"If the economy develops in a way that continues to support the prospects for inflation, the Executive Board assesses that it will soon be appropriate to start raising the repo rate at a slow pace," the Sveriges Riksbank said as it left the repo rate unchanged at a record low -0.50 percent, as expected.

"The forecast for the repo rate is the same as in September and indicates that the repo rate will be raised by 0.25 percentage points either in December or February," the bank added.

Deputy Governors Martin Floden and Henry Ohlsson entered reservations against the decision to hold the repo rate unchanged and advocated raising the repo rate to -0.25 percent.

Swedish interest rates entered negative territory in early 2015 and the benchmark repo rate has been at its current level since February 2016.

Economic developments and forecasts were largely unchanged from its September policy session, the bank noted, adding that there are signs that inflationary pressures are rising.

The conditions are good for inflation to remain close to the target of 2 percent in the coming years, the bank said.

Stressing that the krona exchange rate needs to develop in a manner compatible with inflation remaining close to target, the Riksbank said, "Monetary policy needs to proceed cautiously and be expansionary for a long period of time to come."

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