Board members of Sweden’s Riksbank signaled they are ready to deploy another key rate hike and plan to keep a restrictive monetary policy for longer in the battle with stubbornly high inflation.
(Bloomberg) — Board members of Sweden’s Riksbank signaled they are ready to deploy another key rate hike and plan to keep a restrictive monetary policy for longer in the battle with stubbornly high inflation.
“I can envisage further tightening being necessary so that we can be reasonably sure that inflation will continue down to our target of 2%,” Governor Erik Thedeen said in minutes from the central bank’s latest rate-setting meeting. “This need not be at the next meeting; further tightening can come at a later stage.”
At the Sept. 20 gathering, the central bank’s executive board decided to raise its benchmark rate by a quarter point to 4%, as prices on services continue rising at a rapid clip and the Swedish currency has traded at record lows against the euro, making imported goods more expensive.
Read More: Riksbank Hikes Swedish Rate With Door Kept Open to Act Again
The rate decision aligned the Swedish central bank with global peers in sending a signal that while borrowing costs may not rise much further, they are likely to remain at current levels for an extended period of time.
The Riksbank’s guidance on future moves indicated some probability of an additional hike in November, with Deputy Governors Anna Breman and Per Jansson in particular indicating another hike may be necessary, in line with the governor’s stance.
“Our monetary policy strategy must allow for the possibility of setbacks on the way back to sustainably low and stable inflation, in which case a further rise this year and/or next year may be necessary,” Breman said.
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