Debate Politics Forums - View Single Post - European Central Bank Likely to Raise Rates

donsutherland1 · 07-03-08, 07:01 AM

Just prior to the ECB's interest rate hike, Sweden's Riksbank raised its benchmark interest rate 25 basis points to 4.50%. That central bank issued a bluntly worded statement concerning its responsibility to combat inflation and hinted that additional rate hikes could be required this year.

"Inflation has risen substantially and is at its highest level since the mid-1990s. The main reason for the high inflation is that energy and food prices in the world market have increased so much. But increasingly high domestic resource utilisation in recent years has also contributed to rising inflation. At the same time, inflation expectations remain high," the central bank's statement on its decision explained.

"Monetary policy has the task of stabilising inflation," the Riksbank declared, while adding, "The substantial rises in food and oil prices risk leading to other prices rising too quickly. The Riksbank’s assessment is therefore that the repo rate needs to be raised now and on a couple of further occasions during the year to bring inflation back towards the target a couple of years ahead."

07-03-08, 07:01 AM	#4 (permalink)
donsutherland1 Moderator Mod team member Join Date: Oct 2007 Last Online: Today 08:58 PM Location: New York Posts: 2,467 Thanks: 814 Thanked 1,572 Times in 877 Posts Lean: Centrist Gender: Awards:	Re: European Central Bank Likely to Raise Rates Just prior to the ECB's interest rate hike, Sweden's Riksbank raised its benchmark interest rate 25 basis points to 4.50%. That central bank issued a bluntly worded statement concerning its responsibility to combat inflation and hinted that additional rate hikes could be required this year. "Inflation has risen substantially and is at its highest level since the mid-1990s. The main reason for the high inflation is that energy and food prices in the world market have increased so much. But increasingly high domestic resource utilisation in recent years has also contributed to rising inflation. At the same time, inflation expectations remain high," the central bank's statement on its decision explained. "Monetary policy has the task of stabilising inflation," the Riksbank declared, while adding, "The substantial rises in food and oil prices risk leading to other prices rising too quickly. The Riksbank’s assessment is therefore that the repo rate needs to be raised now and on a couple of further occasions during the year to bring inflation back towards the target a couple of years ahead."