Riksbank says it may need to hike rates ‘soon’

Bloomberg

Sweden’s central bank said it may soon need to raise interest rates for the first time in seven years if the pace of growth in Scandinavia’s biggest economy continues to support inflation.
The Riksbank stuck to its earlier guidance, which gave policy makers a window from December until February to deliver a 25 basis-point rate increase. The bank kept its main rate at minus 0.5 percent, as expected by economists.
“If the economy develops in a way that continues to support the prospects for inflation, the executive board assesses that it will soon be appropriate to start raising the repo rate at a slow pace,” the Riksbank said in a statement on Wednesday.
Robert Bergqvist, chief economist at SEB AB, said the Riksbank’s message was “crystal clear” and that policy makers are poised to deliver a quarter-point increase in December or February. “A couple of rate hikes aren’t a threat to economic growth or home prices,” he said in a tweet.
The krona traded around 0.1 percent lower against the euro as of about 10 a.m. in Stockholm.
Policy makers are trying to restore a more normal interest-rate environment in Sweden as inflation shows signs of stabilising around the Riksbank’s 2 percent target, economic growth exceeds the EU average and unemployment falls. Swedish efforts to move away from an historic period of monetary stimulus follow steps taken by a number of the world’s major central banks, most notably the US Federal Reserve.
Home to companies such Hennes & Mauritz AB and Ericsson AB, Sweden is enjoying its longest period of economic expansion since the early 1980s.