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Wednesday, October 4, 2023

Sweden’s big interest rate hike follows other central banks | business news

STOCKHOLM (AP) — Sweden’s central bank followed other central banks in embarking on a big hike in its key interest rate to fight inflation, saying Thursday that high prices are sapping people’s purchasing power and making it harder for households and businesses plan their finances.

The Riksbanken said the three-quarters of a percentage point increase lifts the benchmark rate to 2.5%, the highest in 14 years, according to the Swedish news agency TT, and is aimed at “reducing inflation and safeguarding the target of inflation”.

Consumer prices rose 9.3% in October compared to the previous year in the European Union country, below the 9.7% observed in September.

The large rate hike in Sweden, which does not use the euro and is therefore not part of the European Central Bank’s decision-making, builds on the huge percentage point increase made in September.

It comes as the ECB, the US Federal Reserve and other central banks have also made large rate hikes to combat the inflation that has been squeezing people around the world.

In Sweden, the forecast “shows that the policy rate will likely rise further early next year and then be just below 3%,” the bank said.

“It is still difficult to assess how inflation will develop and the Riksbank will adjust monetary policy as necessary to ensure inflation returns to target within a reasonable amount of time,” the bank said in a statement.

The decision on the policy rate will be applied from November 30.

This story has been corrected to show that the 2.5% rate, not the rate increase, is the highest in 14 years.

Copyright 2022 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.

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