Sweden’s central bank hiked interest rates for the eighth consecutive time on Thursday, taking the main rate to 4%, as the country continues to battle high inflation.
The quarter-point increase is in line with the expectations of analysts polled by Reuters.
Sweden’s headline inflation, which excludes energy costs, slowed more than expected last month, coming to 7.2% for the month of August, according to Statistics Sweden. The central bank stated that the Swedish economy was “moving in the right directions” but also noted that inflationary pressures were “still too high”. The krona rose to 11,1720 against the U.S. Dollar in the minutes following the announcement. This was up from 11.1588 before the announcement.
The Scandinavian country has struggled with a weak currency, as the krona hit record lows against the euro over the last couple of months. The housing market has meanwhile felt the full impact of unexpected and aggressive interest rate hikes.
The Riksbank has been lifting rates at every meeting, starting with May 2022.
Stefan Ingves, former central bank governor, in January warned that Sweden was facing its “day of reckoning,” as house prices plummeted and the wider economy stuttered.
“I’ve persistently time and time again said that the debt level in the household sector is just way, way too high and there will be a day of reckoning and eventually rates will go up, and now rates have gone up,” Ingves said.
Norway’s central bank also opted to raise rates Thursday, adding 25 basis points to 4.25% for its main rate. A December rate hike is “likely,” according to the bank’s governor.
“Whether additional tightening will be needed depends on economic developments. Ida Wolden Bache stated in a recent press release that there will be at least one more policy rate increase, most likely in December.