Swedish cenbank prioritising anti-inflation fight over growth
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STOCKHOLM, July 11 (Reuters) – Sweden’s central bank will prioritize bringing down inflation over risks to growth, rate-setters said in the minutes of its most recent policy meeting, published on Monday.
At the end of June, the Riksbank delivered its biggest hike in more than 20 years, taking the benchmark rate to 0.75% from 0.25%, and said rates would hit about 2% around the start of next year.
The next policy meeting is scheduled for Sept. 20.
“The monetary policy tightening shall be implemented, as far as possible, without slowing down economic activity too much and while retaining financial stability,” First Deputy Governor Cecilia Skingsley said in the minutes.
“But if these objectives come into conflict with one another, it is the stabilizing of inflation and financial stability that must take precedence over economic activity.”
The pace of inflation – at a 30-year high – and its broad-based impact has surprised the Riksbank, which until February had expected to keep rates at 0.25% until 2024.
It has now made a 180-degree turn in policy and many analysts believe it may have to keep hiking longer than the current plans indicate.
But with war in Ukraine and the lingering effects of the coronavirus pandemic expected to weigh on the economy, the Riksbank faces a tricky balancing act in reining in inflation without slamming the brakes on growth.
