STOCKHOLM–Sweden’s central bank on Tuesday lifted its key policy rate to 1.75% from 0.75%, raised its rate path and signalled an end to asset purchases at the end of the year as it fights a continued surge in inflation.
Economists polled by The Wall Street Journal before the decision had all expected a 75 basis points hike to 1.50%.
The Riksbank now expects the policy rate to be raised to around 2.5% in 2023, from around 1.9% previously, remaining at that level through 2024 before coming down to around 2.4% at the end of the forecast period in the third quarter of 2025.
“Inflation has become higher than in the Riksbank’s previous forecast in June, and it is expected to rise further during the year,” the central bank said.
By raising the policy rate more now, the risk of high inflation in the longer term is reduced, as well as the need for greater monetary policy tightening further ahead, it said.
During the remainder of the year, the Riksbank will continue to purchase bonds in accordance with plans announced in June, but purchases are expected to cease at the end of the year.
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