Central Bank Rate Changes in Sweden, Norway, Turkey and Brazil
September 22, 2023
The Swedish Riksbank‘s executive board engineered a 25-basis point interest rate hike to 4.0% today, claiming that “inflationary pressures in the Swedish economy are still too high.” That compares with a zero percent rate at the start of the second quarter of 2022 and -0.50% in November 2018. Swedish inflation of 7.5% is far from target, and officials today noted that “the forecast for the policy rate indicates that it could be raised further.”
The Bank of Norway‘s interest rate was also raised 25 basis points today, bring such to a 15-year high of 4.25% versus a pandemic low of zero percent until September 2021. “Whether additional tightening will be needed depends on economic developments. There will likely be one additional policy rate hike, most probably in December”, said Governor Ida Wolden Bache. Norwegian CPI inflation has slowed from a 35-year high of 7.5% to 4.8% but remins more than double the 2% target. The statement also suggests that the rate will not be cut until 2025.
Today’s biggest splash came from the Central Bank of Turkey, where the one-week repo rate was raised 500 basis points to a 20-year high of 30%. Four hikes since the start of June totalling 21.5 percentage points still leaves the interest rate well short of year-on-year inflation that accelerated to 58.9% from 38.2% in June. More rate hikes are inevitable: “Monetary tightening will be further strengthened as much as needed in a timely and gradual manner until a significant improvement in the inflation outlook is achieved.”
The Bank of Brazil‘s Selic rate was cut by 50 basis points to 12.75%. It had been cut that amount in August as well. The rate previously had been increased by 725 basis points in 2021 and another 450 bps last year. A further half percentage point cut is thought likely at the next policy review.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Brazil, Bank of Norway, Central Bank of Turkey, Swedish Riksbank
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