STOCKHOLM (Reuters) – Sweden’s central bank raised its key policy rate by a quarter percentage point to 4.00% as expected on Thursday and said it might need to do more to bring inflation back to its 2% target.
“Developments are thus going in the right direction, but inflationary pressures in the Swedish economy are still too high,” the central bank said in a statement.
“The forecast for the policy rate indicates that it could be raised further.”
The Riksbank has now increased the policy rate at eight consecutive meetings to fight a surge in inflation that peaked at more than 10% in December last year.
Headline inflation stood at 4.7% in August, still well above the 2% target.
Analysts in a Reuters poll had forecast a quarter point hike and were roughly evenly split over whether the Riksbank would tighten again in November.
At its last meeting in June, the Riksbank said it expected to hike the policy rate at least once more this year.
The Riksbank also announced it had decided to hedge a part of its foreign exchange reserves by selling $8 billion and 2 billion euros for crowns. It believes the Swedish currency is undervalued.
(Reporting by Simon Johnson and Johan Ahlander; additional reporting by Terje Solsvik, Niklas Pollard and Anna Ringstrom; editing by Niklas Pollard)
