Swedish central bank chief says more rate hikes likely due to stubborn inflation

STOCKHOLM, March 26 (Reuters) – The Swedish central financial institution might need underestimated inflationary stress and can possible have to stay to its forecasts of one other rate of interest hike in April, Riksbank Governor Erik Thedeen mentioned on Sunday.

The central financial institution has raised charges to three% from 0% a 12 months in the past and has but to curb 9.4% inflation, properly above the two% goal. It hiked the benchmark price by 50 foundation factors in February and has indicated one other hike by 25 or 50 foundation factors in April.

“It might be that the inflation course of is worse than we thought,” Erik Thedeen instructed SVT tv.

Swedish inflation soared in February. Whereas headline inflation at 9.4% was in step with the Riksbank’s forecast, underlying worth pressures – stripping out unstable power costs – jumped to 9.3% year-on-year, up from 8.7% within the earlier month and above the Riksbank forecast of 8.0%.

Some economists urge the Riksbank to pause the cycle of hikes, arguing that larger charges may derail the interest-rate delicate Swedish economic system and, in a worst-case situation, set off a monetary disaster.

Nonetheless, Thedeen mentioned the principle situation remained a hike of 25 or 50 foundation factors in April and added that inflation outcomes because the financial coverage resolution in February had been worse than anticipated.

“It’s in our forecasts that inflation will come down fairly shortly. The issue is that it has been in our forecasts all by means of 2022 and it has but to occur,” Thedeen mentioned.

The Riksbank will announce its subsequent financial coverage resolution on April 26.

Reporting by Johan Ahlander; Enhancing by Cynthia Osterman

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