HELSINKI, Nov. 4 (Xinhua) -- Sweden's central bank, the Riksbank, raised its policy rate by 25 basis points to 2 percent on Wednesday, its first increase since September 2023, citing rising inflationary pressures driven by supply disruptions linked to the Middle East conflict and a strengthening domestic economy.
The new policy rate will take effect on Nov. 11. The bank also signaled that further rate hikes were likely over the coming year if the outlook for inflation and economic activity remained unchanged.
In a statement, the Riksbank said global inflationary pressures remained elevated as supply disruptions related to the Middle East conflict continued to push up energy prices and inflation abroad.
The bank warned that stronger economic activity, supply-related cost increases and a weaker Swedish krona could push both headline and underlying inflation above its 2 percent target next year.
Moreover, the bank cautioned that persistent supply disruptions could keep inflation elevated, while geopolitical uncertainty, concerns over artificial intelligence investments and weak public finances in some countries could weigh on global demand.
