Mikael Sjoberg/Bloomberg via Getty Images Sweden’s Riksbank on Tuesday initiated a 100 basis point interest rate hike, taking its key rate to 1.75%, as it warned that “inflation is very high”. In a statement, the central bank said rising inflation “undermines the purchasing power of households and makes it more difficult for both companies and households to plan their finances.”

With inflation still high, the Fed may be a long way from stopping hiking The sharp increase comes as the Federal Reserve kicks off its two-day monetary policy meeting, with markets broadly expecting a 75 basis point hike as policymakers try to get rising prices under control. The Riksbank said monetary policy would need to tighten further to bring inflation back to the 2% target and forecast further rate hikes over the next six months. “Future inflation developments remain difficult to assess and the Riksbank will adjust monetary policy as necessary to ensure that inflation returns to target,” it said. Although global factors such as residual imbalances after the Covid-19 pandemic and rising energy prices due to Russia’s war in Ukraine have pushed prices higher, the Riksbank’s executive board said strong economic activity in Sweden also contributed. Consumer price inflation in Sweden rose to 9% annually in August, its highest level since 1991 and exceeding the Riksbank’s previous forecast in June. “Rising prices and higher interest costs are being felt by households and companies, and many households will have significantly higher living costs,” the Riksbank said. “However, it would be even more painful for households and the Swedish economy in general if inflation remained at today’s high levels.” The comments echoed the recent line from Fed Chairman Jerome Powell, who said the US economy will need to deal with “some pain” to prevent inflation from causing more long-term damage. This is breaking news, check back later for more.