Sweden’s Riksbank Says Middle East Conflict Has Raised Inflation Risks

Sweden’s central bank said the conflict in the Middle East has increased the likelihood of an interest-rate hike before the end of this year, even as underlying inflation remains low and the economic recovery is still fragile. According to Jin10, minutes from the Riksbank’s latest monetary policy meeting, released on Wednesday, showed policymakers viewed the conflict as adding to inflation risks and raising the probability of tightening by year-end. Riksbank Governor Erik Thedeen said the impact of the conflict was now clearly reflected in several indicators of price pressures in Sweden and abroad, though its longer-term effects were still difficult to assess. He said the Riksbank was moving toward a slightly tighter policy stance, but emphasized that any adjustment would remain small and could be increased or reduced quickly depending on how inflation risks evolve.