by Niklas Pollard and Johan Ahlander
STOCKHOLM (Reuters) – Sweden’s central bank on Thursday raised its benchmark rate by a quarter point to 3.75%, as expected, and said it had decided to increase the pace of bond sales by state while predicting at least one other rate hike this year.
“The forecast is that the policy rate will be raised at least once more this year,” the Riksbank said.
Inflation in Sweden has started to come down but remains far too high at 6.7% in May, against a target set by the central bank at 2%.
At its previous meeting in April, the Riksbank raised its key rate by half a point and indicated that it expected another 25 basis point hike in June or September before ending its tightening cycle. .
“The Riksbank is returning to showing a ‘hawk’ face after a brief ‘dove’ stint in April,” Handelsbanken analysts said in a note. “We maintain our forecast of two more quarter-point increases, in September and November.”
In a separate statement, the central bank said it was considering hedging some of its foreign exchange reserves to reduce financial risks.
The institution added that increased sales of sovereign debt securities from September could help strengthen the Swedish krona, but added that if monetary policy were to be tightened further, rate hikes would be “the tool main and most effective.
( Laetitia Volga, edited by Blandine Hénault)
Copyright © 2023 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
