Swedish central bank hikes rate to 3.5 per cent

Sweden’s Riksbank on Wednesday hiked its guiding interest rate by a half-point to 3.5 per cent as the central bank tries to rein in double digit inflation.

The inflation rate, which came in at 10.6 per cent in March, “is still far too high and underlying inflation has been much higher than expected during the first months of the year,” the bank said in a statement. “The forecast indicates that the policy rate will probably be raised further by 0.25 percentage points in June or September,” it added.

Inflation in Sweden peaked in December at 12.3 per cent, a more than 30-year high. It slowed slightly in January to 11.7 per cent before unexpectedly spiking back to 12 per cent in February.

The Riksbank noted that the slight fall in inflation in March was mostly a result of lower energy prices.

“Disregarding energy prices, inflation has been much higher than expected during the first months of the year,” the bank said. Sweden’s inflation adjusted for fixed interest rates (CPIF) -- the figure used by the Riksbank to guide monetary policy -- was 8.0 per cent in March, down from 9.4 in February.