Announcing that “inflation is too high,” the Riksbank of Sweden increased interest rates by 100 basis points on Tuesday, increasing its base rate to 1.75 percent.

The central bank claimed in a statement that rising inflation is “undermining households’ purchasing power and making it more difficult for both firms and households to arrange their finances.”

Markets had anticipated a hike of 75 basis points as officials attempt to contain soaring prices; however, the unexpected increase comes as the US Federal Reserve begins its two-day monetary policy meeting.

In the future six months, the Riksbank expected more rises in interest rates, indicating that tightening monetary policy will be necessary to bring inflation back to its target of 2%.

It further stated that the Riksbank would modify monetary policy as necessary to ensure that inflation is returned to the target. It stated that it was still challenging to predict how inflation would change in the future.

The Riksbank executive board stated that while there are many global factors contributing to the high prices, such as unresolved imbalances following the Covid-19 outbreak and skyrocketing energy costs as a result of Russia’s conflict in Ukraine, Sweden’s robust economic activity has also been a factor.

In Sweden, the rate of consumer price inflation surged to 9% annually in August, exceeding the prior forecast made by the Riksbank in June and hitting its highest level since 1991.

A lot of households will have significantly higher living expenses as a result of rising prices and rising interest rates, according to the Riksbank.

However, it will become much more expensive for people and the Swedish economy as a whole if inflation continues at present high rates.

The comments were a reiteration of a previous stance taken by Fed Chairman Jerome Powell, who said that “some pain” will have to be borne by the American economy in order to prevent inflation from wreaking further long-term havoc.