After many years of negative interest rates, the Riksbank raised the key interest rate to 0.25 per cent at the most recent monetary policy meeting in April.

The interest rate will be raised by a further 0.5 percentage points already at the next monetary policy meeting in June, predicts Andreas Wallström, head of forecasting at Swedbank.

He believes that the Riksbank will continue to raise interest rates until April next year.

Then the policy rate will be around 1.75 percent, according to Wallström.

- But then we think you hit the interest rate ceiling.

There is simply no need for more raises after that.

It is now that inflation is so high, if we look ahead one year, the best guess is that the economy will slow down as a result of these interest rate increases, and that in itself will dampen price development, says Andreas Wallström at Ekonomibyrån.

According to Finansinspektionen's Director General Erik Thedéen, monetary policy will be very effective, because Swedish households have such large debts.

- So it is enough with increases of one or a few percent for it to have a great effect on economic activity, he says in Ekonomibyrån.

Can have major effects

Pricing in the fixed income market today indicates that the key interest rate will rise to around 2.5 percent, says Thedéen.

- Then you have a four percent mortgage rate and it is about three times as high interest cost than people have today for their variable mortgages.

So it can have quite large effects even if the figure of 4 percent does not sound so high.

Do not miss the whole episode of Ekonomibyrån: Is the bubble bursting now?

about the housing market and the interest rate in SVT Play.