The Swedish central bank keeps interest rates unchanged at 4%

The Riksbank kept the interest rate unchanged at 4% on Thursday, November 23, but said it was ready to raise it further if inflation expectations deteriorated.

The central bank raised interest rates from zero levels in April 2022, in a series of increases to combat high inflation caused by Covid and the war in Ukraine.

The Riksbank said inflation, which peaked at more than 10%, was still too high and there was a risk it could become irreversible.

But he said that price pressures are moving in the right direction after 8 consecutive increases.

The Swedish central bank said in a statement, “The expectations for the interest rate are that it may be raised further at the beginning of next year, and that monetary policy should be contractionary for a relatively long period of time.”

The Swedish krona, which increased the central bank’s concerns about inflation, fell sharply after the stabilization decision.

Analysts were divided before the decision, with 10 out of 19 expecting a rate hike, while 9 of them expected a hold.

Most analysts believe that interest rates have now peaked, and attention will shift to when the central bank will start easing policy again.

The Riksbank expects interest rates to remain at the current level – or higher – over the next year, but markets are signaling a turnaround sooner than that as the economic slowdown begins to take its toll.