Sweden: The Riksbank raises the interest rate by 100 basis points, to 1.75%.

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The riksbankthe central bank of Sweden, announced this Tuesday that raises its interest rate by 100 basis points (bp), to 1.75%. The Reuters estimate pointed to a rate hike of 75 basis points.

Market reaction

With the initial reaction, EUR/SEK fell to a fresh daily low of 10.7305 before recovering modestly. At the time of writing, the pair is trading at 10.7720, down 0.15% on the day.

Key points of the monetary policy statement

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“The forecast for the monetary policy rate is that it will continue to rise in the next six monthsyes.”

“Future inflation developments remain difficult to assess and the Riksbank will adjust monetary policy as necessary to ensure inflation returns to target.”

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“Monetary policy needs to be tightened further now to get inflation back on target.”

Raising the policy rate more now reduces the risk of high inflation in the longer run and thus the need for further tightening of monetary policy later on.”

“Asset purchases will continue in accordance with the June decision, but are expected to cease by the end of the year.”

Source: Fx Street

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