STOCKHOLM, March 4 (Reuters) - Sweden's central bank see
more rate rises ahead and will probably increase interest rates
by 25 or 50 basis points at the next meeting in April, Riksbank
Governor Erik Thedeen said in an interview with Swedish Radio on
Saturday.
The central bank raised its key interest rate by half a
percentage point to 3% in February and signalled further
tightening in the coming months to combat inflation and
headwinds from a weak currency.
"Inflation is so much above the target and the indicators
for the Swedish economy so far are not so dramatically negative
that it would change the forecasts we have for policy rate
changes," Thedeen said, reiterating that the most likely was for
the Riksbank to raise rates by 25 or 50 points in April.
Headline inflation eased somewhat in January to 9.3%, still
way above the 2% Riksbank target, but even more worrying was
that underlying inflation, excluding volatile energy prices, was
8.7%, up from 8.4% in the previous month.
"It's not just meat and milk prices that have gone up, but
it's broad and pretty much everywhere. And this also means that
the rise is in some sense more difficult to slow down," Thedeen
said.
Thedeen and the central bank has been criticised for putting
too much pressure on Swedish households, with several economists
arguing that the Riksbank risks wrecking the economy as
consumers are already feeling the strain from rampant price
increases.
"We have to be wary that we don't cause more harm than we
are doing good, but I don't think we are at that point. We are
talking about a relatively mild downturn of the Swedish
economy," Thedeen said.
Sweden's GDP growth for the fourth quarter of 2022 declined
by 0.2% compared with the fourth quarter 2021 and fell by 0.5%
compared with the third quarter, figures from the Statistics
Office showed this week.
(Reporting by Johan Ahlander. Editing by Jane Merriman)
Messaging: johan.ahlander.reuters.com@reuters.net))
