Swedish key interest rate increases
The Swedish national bank has increased its key interest rates – the repo rate – by 0.25 percentage points to 1.75 per cent.
The increase comes as no surprise – with the bank determined to climb back to higher interest rates as the economic swing continues.
Climbing back for bottom-level rates aimed at stimulating the then sluggish economy, to the new level is to be just another step towards 2.5% at the beginning of next year and 3 % the year after.
Speaking to Swedish Radio News, bank chief Stefan Ingvers insists that this was the only way to avoid higher inflation – which hurts everyone a – nd to keep the predicted rate at or below 2%.
But can the Swedish economy take this increase? He says yes … that it’s not that high and is rather normal for the present situation…
He also believes that the average household can take the increase – but that everyone concerned should sit down at the kitchen table and looks at their economy.
Ingela Gabrielsson is the chief economist at the Nordea bank, and admits that it’s time for Swedes to take the situation seriously and look at their home and other loans.
She says she’s convinced that the average household can take the hike .. since Sweden has rather high demands for credit takers – making sure that even an 8 or 9 % rent increase should be possible for those wanting a loan.
Asked it the government’s income tax deductions will help the average family swallow the higher bank rate, she says this depends if that family has really thought it through and didn’t spend the extra income elsewhere.
She concludes that one can be surprised how naive some people are – ignoring the warning signals, taking laons on just about everything and becoming totally unprepared for the changes:
Meanwhile, the head of the national bank predicts that the currency situation will be stable –a s long as that inflation rate increase can be kept at the 2% level.
He also predicts a continued hike in oil and raw materials prices – but that this shouldn’t have that much impact on the Swedish economy
He adds that a continued upswing in the global economy is good for Sweden.
Higher bank interest rates can be expected to boost the value of the Swedish kronor, make travel aboard somewhat cheaper , but make it more difficult for those export industries.