MNI BRIEF: Riksbank Floden: Must Hike Much Sooner Than Planned

Riksbank Deputy Governor Martin Floden signalled Wednesday that he could back tightening as early as this month's policy meeting, arguing that it may avoid more substantial tightening later on. "We must raise the policy rate much earlier than previously planned," he said.

Floden noted that the Riksbank's February forecast was obsolete, with core inflation hitting 3.4% that month compared to the 2.3% expected. It's "unavoidable that near-term inflation will remain high," but tightening "would likely support an appreciation of the krona and thereby mitigate the high prices of commodities and other imported goods," he said.

He hoped that "gradual modest rate increases will suffice if the initial rate increases are well-timed." The Riksbank has shifted dramatically from forecasting tightening would start towards the end of its three-year forecast horizon to opening the door to tightening now.