COPENHAGEN, Denmark (TNZT) – Sweden’s central bank on Tuesday raised its key interest rate by a full percentage point to 1.75%, as inflation is “too high” and “undermines household purchasing power and harms both businesses and households.” to plan their finances.”
Riksbanken said inflation has risen rapidly – the rate for August was 9.0% – and “to mitigate the rapid pace of price increases, central banks worldwide have been raising key rates at a rapid pace.”
It said that “during the pandemic, global imbalances developed between supply and demand. Russia’s war in Ukraine has pushed the prices of a number of important commodities even further and has caused serious disruptions in energy markets in Europe, pushing electricity and gas prices to very high levels.”
It added that “the good economic activity in Sweden has also contributed.”
Riksbanken said the key rate will be raised over the next six months to bring inflation back to target levels.
Sweden is part of the European Union but does not use the euro, so it is not part of the European Central Bank.