The Riksbank recently raised interest rates to 4%, against expectations, sending the Swedish krona soaring higher.

The Swedish central bank explained that it has raised the interest rate by 25 basis points to combat rising inflation, adding that there were risks linked to slower economic activity and financial market turbulence.

The bank has kept its options open, by explaining that future monetary policy decisions will be based on data that is released, but did advise that interest rates are expected to remain steady for this year.

The move saw the Swedish krona rise from 6.4275 from a price of 6.4785 prior to the news release.

The US Federal Open Market Committee unanimously decided to raise interest rates by another 25bp during last week monetary policy meeting, taking the fed funds rate to 5.25%. More interestingly, the statement language was a notch more dovish than expected. While the FOMC does not promise anything for the August meeting, the overall message is still that near-term monetary policy remains data dependent, the FOMC is still vigilant on inflation and has retained its tightening bias.
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As broadly expected, the Polish central bank’s (NBP) Monetary Policy Council (RPP) last week decided in favour of unchanged interest rates, keeping the key policy rate at 4.00%.

The decision to keep rates on hold should clearly be seem in the light of the fact that inflation remains very low - below 1%. That said, the timing of the next rate hike has clearly been brought forward, mainly due to the following circumstances:
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The Slovak central bank (NBS) board meeting ended without any changes leaving the key policy rate at 4.00%. This was broadly expected, especially given the 50bp hike at the May monetary policy meeting.

Today’s decision probably suggests an NBS that is biding its time and waiting for more macro-data on the economy, especially inflation, before moving interest rates.
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The Turkish central bank (TCMB) yesterday after its second emergency monetary policy meeting in just a month that it had decided to hike its key policy by another 225bp to 17.25% - more or less in line with expectations. Furthermore and equally important the TCMB announced that it plans to intervene in the FX market to prop the ailing lira.

Hence, the TCMB continues to act decisively to stop the lira from weakening and to reduce inflationary pressures. We continue to be impressed and believe the TCMB will eventually succeed and we are getting closer to stabilisation of the lira - and setting it up for a potentially strong rebound. However, the situation remains fragile even though we think we are moving towards more stability.
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The South African Reserve Bank’s monetary policy committee (MPC) decided to hike the key interest rate by 50bp to 7.50% at today’s monetary committee meeting - the decision was a bolt from the blue.

The decision likely came as a reaction to increasing inflationary pressures in the economy as a result of strong domestic demand and high oil prices. Adding to South Africa’s woes of late have been the recent slide in the rand, which has been following commodity prices south, increased global aversion to risky emerging markets and last but not least the worsening current account deficit.
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Bank of England (BoE) policymakers are predicted to maintain British interest rates at 4.50 percent on Thursday for the 10th month in a row.

The decision-making body of the BoE, the Monetary Policy Committee (MPC), will likely freeze the “repo” rate, at which the central bank lends to commercial banks, according to a poll of 35 forecasters by AFP’s financial news service AFX News.
However, economists are speculating that the cost of borrowing could rise as soon as August to keep inflation in check.
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