Sweden’s central bank raises interest rates to fight inflation
STOCKHOLM (AP) — Sweden’s central bank raised its benchmark rate from zero to 0.25% on Thursday, citing the highest level of inflation since the 1990s.
The Riksbanken said there had been “unusually large fluctuations in inflation in Sweden” and that last year’s rise “was largely due to rapid increases in energy prices”. The consumer price index for March was 6.1%.
“Year-to-date, non-energy inflation has also risen rapidly and was significantly above the Riksbank’s forecast in February,” the central bank said in a statement. “The results indicate that the recovery is now broad and that the prices of goods and food and services are rising unusually fast.
The central bank said the rate would be raised gradually in the future and would be slightly below 2% in three years. Thursday’s decision will apply from Wednesday.
Sweden is part of the European Union but does not use the euro, so it is not part of the European Central Bank.
The Frankfurt, Germany-based bank that sets monetary policy for the 19 countries using the euro has yet to raise interest rates, saying it will do so “some time after” its efforts to relaunch against the pandemic later this year.
The eurozone saw inflation rise to an annual rate of 7.4% last month, the highest since records began in 1997.
Some other central banks in Europe, the Bank of England and the US Federal Reserve have raised interest rates as inflation soars around the world, driven by strong demand following the depths of the COVID-19 pandemic. 19 and exacerbated by Russia’s war in Ukraine.
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