By Geoffrey Smith
Investing.com -- Sweden's central bank raised its key interest rate by a full percentage point to 1.75% on Tuesday, setting an ominous precedent for a handful of other central bank meetings later in the week.
The move was larger than expected, with analysts having predicted an increase of only 75 basis points.
"Inflation is too high," the Riksbank said in a statement. "It is undermining households’ purchasing power and making it more difficult for both companies and households to plan their finances."
Against that backdrop, it warned it may keep raising the policy rate for the next six months.
The Riksbank is the first of a handful of central banks from advanced economies to hold a policy meeting this week, and its move is likely to spook markets awaiting similar decisions from the U.S. Federal Reserve, the Bank of England and the Swiss National Bank, among others.
The Swedish krona spiked higher on the news but quickly retraced, as markets priced in parallel steps from others such as the Fed and the European Central Bank. By 03:40 ET (07:40 GMT), the krona was down 0.2% on the day against both the dollar and the euro.