The Swedish central bank raises its key rate by one point

Copenhagen, Denmark — Sweden’s central bank raised its key rate by one percentage point on Tuesday to tackle the highest inflation in more than 30 years, the first in a series of big hikes expected from central banks around the world this week.

The Riksbanken said inflation had risen rapidly – to 9% in August, the highest level since 1991 – “undermining households’ purchasing power and making it more difficult for businesses and households to plan their finances “.

The bank raised its benchmark rate to 1.75% and said it would continue to tighten over the next six months as it tries to bring inflation back to its 2% target. In making the big hike, he pointed out that other central banks were rapidly raising rates as consumer prices soared.

The U.S. Federal Reserve is set to deliver a sharp three-quarter-point hike for the third straight time on Wednesday, followed by the Bank of England on Thursday, whose half-point hike last month was the biggest in 27 years. and is scheduled to do another.

“During the pandemic, global imbalances have emerged between supply and demand,” the Swedish central bank said. “Russia’s war in Ukraine has further driven up the prices of several important commodities and created severe disruptions in energy markets in Europe, causing power and electricity problems. gas prices at very high levels.

He added that “the good economic activity in Sweden has also contributed to this”.

Sweden is part of the European Union but does not use the euro, so it is not part of the European Central Bank.