Banks Swedish central bank rejects zero line, raises key interest rate – Get used to higher interest rates, advises bank governor

Swedish the central bank has raised its key interest rate by 0.25 percentage points and anticipates that the increases will continue in the coming years. According to the Riksbank’s interest rate forecast, the key interest rate will be 1.18 per cent after one year and 1.57 per cent after two years. At the end of the forecast period, three years from now, it will be close to 2%.

Director general Stefan Ingves urged the Swedes to get used to higher interest rates in connection with the interest rate decision.

The Bank of Sweden had kept its interest rate at zero since 2014. An increase in interest rates was considered necessary to bring inflation down.

The Riksbank has turned its sled on interest rate issues this spring. Back in February, it predicted that the first rate hike would not be forthcoming until the end of 2024.

However, inflation has risen markedly higher than previously expected by the central bank, and prices are rising on a broad front.

“Today, it’s not just about higher energy prices, but prices are now rising on a broad front,” Ingves said.

The Riksbank now forecasts that consumer prices will rise at a rate of 5.5 per cent this year. Next year, inflation will slow to 3.3 percent. With its interest rate hikes, the Riksbank aims to bring inflation close to 2% in 2024.