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OFFBEAT

Central bank reveals location of Sweden’s gold

Sweden is in possession of just over 125 tonnes of gold - a market value of 37.5 billion kronor ($5.9 billion) - and the country's central bank revealed on Tuesday exactly where it's being kept.

Central bank reveals location of Sweden's gold

Information on the whereabouts of the Swedish Riksbank's gold reserves, which weigh in at 125.7 tonnes and are roughly equivalent to 10,000 gold bars, was revealed on Tuesday after discussions with the central banks of four countries around the world.

The gold is stored mostly in the Bank of England, where 61.4 tonnes of it is kept, amounting to 48.8 percent of the total. The next biggest storage is in the Bank of Canada, where 33.2 tonnes or 26.4 percent is kept, followed by the Federal Reserve Bank of New York with 13.2 tonnes, or 10.5 percent.

The Swiss National Bank, meanwhile, keeps 2.8 tonnes or 2.2 percent, and 15.1 tonnes of the gold are kept on home soil at the Riksbank, an amount corresponding to 12 percent of the total 125 tonnes.

The bank added that the total value of its gold and its foreign currency reserves amounts to the equivalent of 409 billion kronor.

The gold comes from "earlier historical connections" where banknotes and coins could be exchanged for gold, the bank explained in a statement. It added that the value of gold does not typically follow the pattern of the foreign currency reserves, allowing the bank's total reserves to stay more stable as a result.

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ECONOMY

Sweden’s Riksbank raises rates above zero for first time since 2014

Sweden's central bank has increased its key interest rate to 0.25 percent, marking the first time the rate has been above zero for nearly eight years.

Sweden's Riksbank raises rates above zero for first time since 2014

In a press release announcing the move, the bank said that it needed to take action to bring down the current high rate of inflation, which it predicts will average 5.5 percent in 2022, before sinking to 3.3 percent in 2023.

“Inflation has risen to the highest level since the 1990s and is going to stay high for a while. To prevent high inflation taking hold in price and wage developments, the directors have decided to raise interest rates from zero to 0.25 percent,” it said. 

The Riksbank, which is tasked by the government to keep inflation at around two percent, has been caught off-guard by the speed and duration of price rises.

Just a few months ago, in February, it said it expected inflation to be temporary, predicting there was no need to increase rates until 2024.

The last time the key inflation rate was above zero was in the autumn of 2014. 

In the press release, the bank warned that the rate would continue to increase further in the coming years. 

“The prognosis is that the interest rate will be increased in two to three further steps this year, and that it will reach a little under two percent at the end of the three-year prognosis period,” it said. 

According to the bank’s new future scenarios, its key interest rate will reach about 1.18 percent in a year, and 1.57 percent within two years. 

In a further tightening of Sweden’s monetary policy, the bank has also decided to reduce its bond purchases. 

“With this monetary policy we expect inflation rates to decline next year and from 2024 to be close to two percent,” the bank wrote. 

Annika Winsth, the chief economist of Nordea, one of Sweden’s largest banks, said the rate hike was “sensible”. 

“When you look at how inflation is right now and that the Riksbank needs to cool down the economy, it’s good that they’re taking action – the earlier the better. The risk if you wait is that you need to righten even more.” 

She said people in Sweden should be prepared for rates to rise even further. 

“You shouldn’t rule it out in the coming year. Then you’ll have a once percentage point increase which will go straight into fluctuating mortgage rates.” 

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