Sweden’s central bank sends the right interest rate signal

Es must no longer take recession risks into account. The mounting inflationary pressures are forcing the central banks to go all out. The Swedish Riksbank showed this on Tuesday with its interest rate hike by a full percentage point. Gone are the days when monetary policy looked at market expectations and tried to avoid unpleasant surprises as far as possible. Inflationary pressures continue to mount around the world, despite interest rate hikes already taking place. Fighting currency devaluation requires decisive interest rate moves. The signal must be unmistakable and also painful.

Because if the central banks act too cautiously, it can cause more damage than the economy slipping into recession. It is about the trust of the population in monetary stability and thus in the foundations of our economic system.

When the Bundesbank expects inflation rates in Germany to be in the double digits in the near future, the inflationary pressure will have reached historic levels. The record increase in producer prices of 45.8 percent in August illustrates this and foreshadows the worst. This is putting the European Central Bank (ECB) under pressure. Especially when the American Federal Reserve raises the key interest rate once again. Sweden’s Riksbank sent the right signal.

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