STOCKHOLM – Inflation in Sweden rose to its highest in more than a decade, according to data published Thursday. But, the central bank won’t react unless there are persistent price pressures.

According to statistics from Sweden (SCB), consumer prices rose by 0.5% and 2.8% respectively in September when they were measured at a fixed interest rate.

The central banks targets 2% CPIF inflation.

This was the highest headline inflation rate since October 2008. However, it was lower than the forecasted 3.0% by Reuters and a comparable forecast by the central banks.

In a note, TorbjornIsaksson, Nordea’s economist said that the September reading was lower than expected. This reduces upside risks to our (inflation forecast). “We anticipate the Riksbank keeping the repo rate at zero for the next few years. The balance sheet might be cut in 2022.”

Sweden’s economy quickly recovered from the pandemic. Nearly all restrictions on growth have been removed, which argues for strong growth despite an August blip in GDP.

The pandemic, which left behind a severe epidemic, has caused inflation to rise.

Riksbank expects inflation to reach 3% in the final quarter of 2018. The central bank believes inflation will rise to 3% by the end of the year, and that headlines figures will improve. This means policy makers don’t have to respond immediately.

According to the central bank, it expects that its balance sheet will remain unchanged for next year. The benchmark repo rate should also stay at 0% through at least the last quarter of 2024.

Some policymakers believe a rise could be earlier than anticipated, though others suggest that the balance might shrink in 2022.