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The Bank of Sweden raised the key rate to the highest in 14 years

November, 24 2022
watermark Economic news

The Central Bank of Sweden, Riksbank, has increased its key interest rate by 75 basis points – from 1.75% to 2.5% per annum. The last time the rate was at this level 14 years ago, in December 2008. 

The Swedish central bank predicts that in 2023 the rate will peak at around 2.8% per annum and will be near this mark in 2024 and 2025. Previously, it was expected that the maximum rate level next year would be about 2.5%, and by the end of 2024 the rate would drop to about 2.4%.

The management of the regulator notes that the risks that the current high level of inflation will consolidate are still high. Therefore, it is extremely important that monetary policy guarantees a slowdown in inflation and its stabilization near the target level of 2% in a reasonable time. The Central Bank also noted that the rate hike now reduces the risk of high inflation in the long term, as well as the risk of further tightening of monetary policy in the future.

At the moment, inflation in Sweden is 9.3%. Riksbank predicts that in 2023, inflation will average 5.7%, and the country's GDP will decrease by 1.2%.

Today's meeting of the Central Bank of Sweden was the last for the current head of the bank Stefan Ingves, who headed it for 17 years. From January 1, this position will be taken by Eric Teden, who was previously the head of the Swedish Financial Supervision Authority.

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