Sweden Lifts Interest Rates by Full Percentage Point with More to Come

Sweden's central bank raised interest rates on Tuesday by a larger-than-expected full percentage point to 1.75% and warned of more to come over the next six months as it sought to get to grips with surging inflation, Reuters reported. Inflation hit 9% - a 30-year high - in August as the effects of soaring energy prices spread through the economy, and has overshot the Riksbank's forecasts. The rate hike was the biggest since the inflation target was adopted in 1993, equalling the full percentage point hike of November 1992 during Sweden's domestic financial crisis when the main rate hit 500% for a short period. "When rates go up, obviously, interest costs go up for many households, but the costs of high inflation - persistently high inflation - those are, in fact, even bigger," Governor Stefan Ingves told reporters. "By raising rates now and by continuing to hike rates we reduce the risk that inflation is going to park itself at a high level." A majority of analysts in a Reuters poll had forecast a 75 basis point hike on Tuesday, with only two expecting a full percentage point. Read more.
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