Markets expect the Swedish Central Bank to raise rates more than any other major Western central bank

The Swedish Central Bank is expected to raise its key interest rate from 1.75 to 2.00 percent on Wednesday. It would be the first hike in more than two years.

But the market is pricing in further hikes totaling 1.11 percentage points over the next year, according to economists at major bank SEB.

“The Swedish Central Bank will, so to speak, catch up with the others,” says SEB strategist Amanda Sundström.

The US Federal Reserve (Fed) is expected to raise rates by 0.61 percentage points over the same period, while the European Central Bank (ECB) is expected to raise rates by 0.69 percentage points. But both have already raised their policy rates this year, to 3.75–4.00 percent and 2.50 percent, respectively.

In Norway, where the policy rate was raised to 4.50 percent in September, the market is hesitant about any hike at all in the near future.