FX.co ★ Sweden Central Bank Lifts Rate By 100 Bps

Sweden's central bank raised its benchmark rate at a sharper-than-expected pace on Tuesday citing high inflation.

The Executive Board of Riksbank decided to raise the key interest rate by 1 percentage point to 1.75 percent. Markets widely expected a 75 basis-point rate hike.

The board said the monetary policy needs to be tightened more to bring inflation back to the target. The forecast indicated that the policy rate will be raised further in the coming six months.

Policymakers vowed to adjust monetary policy in a manner necessary to bring the inflation back to the target within a reasonable time perspective.

The board observed that rising prices and higher interest costs are felt by households and businesses. However, the board said it would be even more painful for the economy if inflation remained at today's high levels.