Riksbank leads in first rate hike at the end of 2024

STOCKHOLM – Sweden’s central bank on Thursday left its main repo rate unchanged at 0% as expected and said that the first rate hike is likely to come by the end of 2024.

The Riksbank previously said it expected the repo rate to remain flat at zero throughout the forecast period extending to the third quarter of 2024, but updated forecasts presented Thursday show interest rates will increase in the fourth quarter of 2024.

The bank also said it would begin reducing its balance sheet before forecasting a rate hike.

“The management forecast is that asset holdings will remain flat in 2022 and gradually decline thereafter,” it said.

“With this monetary policy, inflation is expected to hit its target in the longer term.”

The asset purchase program initiated in March 2020 will expire on December 31, 2021, and the Riksbank said it will purchase bonds for 37 billion Swedish kronor ($4.05 billion) in the first quarter. of the year 2022.

Inflation in Sweden is expected to ease next year as an increase in energy prices is expected to be moderate while bottlenecks in supply chains will be resolved as growth enters a phase of stabilization. more, the bank said.

If inflation is close to its long-term target, cost pressures need to mount for longer, which requires continued support from monetary policy, it added.

Write to Dominic Chopping at [email protected]

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