By Dominic Chopping
STOCKHOLM–Sweden’s central bank on Thursday lifted its key policy rate to 3.00% from 2.50% and signalled a further hike in the spring as it continues to fight stubbornly high inflation.
Economists polled by The Wall Street Journal before the decision had expected a 50 basis points hike to 3.00%.
The Riksbank’s new rate path now implies the policy rate will peak at around 3.3% in 2024, from around 2.8% in 2023 previously, remaining at that level throughout 2024, 2025 and into 2026.
The central bank said it will also sell government bonds at a faster pace from April to reduce asset holdings.
Inflation is far too high and has continued to rise, but there are many indications that inflation will fall back clearly this year, the central bank said.
By tightening monetary policy more now, the risk of high inflation remaining for a longer period is reduced, as is the risk of even greater tightening further ahead, it added.
Incoming data and how they affect inflation prospects will continue to be important for the conduct of monetary policy, the Riksbank said.
“With the current monetary policy stance, inflation is expected to fall back this year and to stabilise close to 2% from 2024.”
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