Published 26 April 2023 at 09.42
Economics. The Riksbank's key interest rate will be raised by 0.5 percentage points to 3.5 percent, the authority's executive board announced today.
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“Inflation is still far too high and the underlying inflation has during the first months of the year become significantly higher than expected,” writes the Riksbank in a press release.
The inflation measure CPI fell slightly in March, but is still above 10 percent. This at the same time that the Riksbank sees it as its main task to keep inflation at around 2 percent.
The forecast shows that the key interest rate will probably be raised by another 0.25 percentage points in June or September. But “with the pursued monetary policy, inflation is expected to fall back this year and reach the target in 2024”, states the Riksbank.
“After the rapid rate hikes of the past year, the monetary policy has a tightening effect on the economy and the Executive Board assesses that after the April meeting there is room to adjust the policy rate in smaller steps. However, the uncertainty about the inflation trend is still great. New information and how it is judged to affect the business cycle and inflation prospects will be decisive for how monetary policy is designed,” writes the authority.
First Deputy Riksbank Governor Anna Breman and Deputy Riksbank Governor Martin Flodén reserved themselves against the decision to raise the policy rate by 0.5 percentage points. They instead advocated an interest rate increase of 0.25 percentage points.