Riksbank raises policy rate to 2% from 11 November

Sweden’s central bank (Riksbanken) will raise its policy rate to 2% on 11 November. The decision was announced on 4 November.

The policy rate (styrränta) affects the interest banks charge on loans and pay on savings. The rise is 0.25 percentage points, from 1.75%.

What the rate means

The policy rate guides the rates at which banks borrow from, or deposit money with, Riksbanken. These rates then influence what banks charge their customers.

The decision does not set one mortgage rate for all borrowers. Mortgage customers can pay different rates, as the Swedish Financial Supervisory Authority (Finansinspektionen) explains in its consumer guidance.

Riksbanken says stronger economic activity and higher costs caused by supply problems are expected to push inflation up. The bank says further rate rises are likely if its outlook for inflation and the economy holds.

Comparing mortgage rates

Finansinspektionen advises borrowers to compare their current rate with their bank’s average rate for the same fixed-rate period. The agency also advises comparing offers from several banks, rather than looking only at the advertised rate or discount.

The Riksbank’s next policy-rate decision and report with new forecasts are due on 16 December.