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Sweden Monetary Policy November 2022

Sweden: Riksbank slows pace of tightening in November, brings the policy rate to 14-year high

At its last scheduled meeting this year on 24 November, the Riksbank delivered another rate hike. The 75 basis point increase brought the policy rate to 2.50%—the highest level since 2008. The move, which came on the heels of the largest raise in nearly 30 years in September, signaled a slowing pace of tightening. The decision was largely priced in by markets.

The Riksbank deemed that headline inflation was still too high, motivating the increase; consumer prices with a fixed interest rate (CPIF) inflation came in at 9.3% in October. The Bank noted that the risks that current high inflationary pressures become entrenched are “still substantial”; the Riksbank upwardly revised its average CPIF inflation to 5.7% for 2023 from 5.1% in September. That said, the 2024 CPIF inflation forecast was slightly revised down to 1.5% (September: 1.6%), which likely prompted the smaller rate increase.

With regard to forward guidance, the Riksbank suggested it would hike the rate again in early 2023 to be “just below 3.00%”, pointing at a 25 basis point rise. As in past meetings, the Bank will continue to adapt its policy according to the evolution of inflation; it stated that “it is still difficult to assess how inflation will develop and the Riksbank will adapt monetary policy as necessary to ensure that inflation is brought back to the target within a reasonable time”.

The next monetary policy meeting is scheduled for 8 February 2023.

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