Bank raises interest rates for sixth time

Sweden's homeowners can expect higher living costs after the country's central bank, the Riksbank, raised interest rates by 0.25 percentage points to 3.0 percent. The announcement, made at 9:30am on Friday, means that the repo rate has risen six times since January.

The bank said it expected to raise rates further in the coming months, but said inflation would be lower than previously expected.

“It is reasonable to expect that the repo rate will need to be raised further, at about the same way as the market has been expecting recently,” the Riksbank wrote in a statement.

The bank said it expected inflation to be “moderate”, despite strong growth.

“This is due to high productivity, low domestic cost pressures and downward pressure on prices internationally. Additionally, inflation will be kept down by temporarily falling energy prices and the strengthening of the krona,” the bank wrote.

The Riksbank now expects inflation to be lower in the short term than previously predicted.

“Compared with the prognosis in October, inflation can in the short term be adjusted downwards, mainly as a result of lower energy prices.”

Robert Bergqvist, chief analyst at bank SEB, said there were “no surprises” in the bank’s decision, nor in its accompanying statements.

“It is confirming the trend of rate rises, and that growth is developing as expected. It is therefore natural to raise rates,” he said.

“People should prepare for a further rise in February,” Bergqvist added.