Sweden raised rates.

The Riksbank raised rates by 0.75 percentage points to 2.5 per cent, the highest level since 2008, and hinted that further increases were likely. «It's a fact that we have a 2 per cent inflation target, which is 9 per cent. So it's essential to get back to 2 per cent, and we think that everyone will be better off if we get there sooner rather than later,» Ingves said. According to October's figures from the Value-guard index, Swedish house prices have fallen 14 per cent since their March peak.

Ingves said the peak-to-trough fall should be about 20 per cent and that it should be «manageable», as prices had risen dramatically before this year. The central bank expects the economy to contract by 1 per cent next year, a change from its previous forecast of minus 0.5 per cent growth. The Riksbank was one of the last major central banks to lift its interest rate above zero, only in May this year, prompting accusations that it was not responding appropriately. In 2010 and 2011, the Riksbank and the European Central Bank raised rates after the financial crisis, only to cut them again not long afterwards.

Paul Krugman, a former Nobel economics prizewinner, said at the time that the central bank's position was «possibly the most gratuitous» policy error of the crisis, calling it «sadomonetarist». The Riksbank hit the headlines again in 2015 when it became one of the first central banks to introduce negative rates and kept them there until the end of 2019, when its primary rate went to zero, as Ingves worried about inflation is far below the central bank's targets. In yesterday's monetary policy report, the central bank suggested rates were likely to rise to just below 3 per cent early next year.

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