Russia expels five Swedish diplomats

Moscow said on Thursday it was closing its general consulate in Gothenburg and Sweden's diplomatic mission in Saint Petersburg, ordering five Swedish diplomats to leave Russia.

Russia expels five Swedish diplomats
A Russian flag in Moscow. Photo: Fredrik Sandberg/TT

The Russian foreign ministry said that the Swedish ambassador Malena Mard had been summoned and informed of Moscow’s retaliatory measures over her country’s “confrontational course”.

“A decision was made to declare five Swedish diplomats persona non grata,” the Russian foreign ministry said.

The move came after Sweden said in late April it was expelling five Russian diplomats for “activities not compatible” with their diplomatic status.

Russia said the expulsion was an “openly hostile move”, accusing authorities in the northern European country of conducting a “Russophobic campaign”.

Moscow’s general consulate in Gothenburg will be shuttered on September 1st, the Russian foreign ministry added in a statement.

Sweden’s general consulate in Saint Petersburg will have to stop operations by that time as well, the statement said.

Swedish Foreign Minister Tobias Billström lamented the Russian decision as “very regrettable”.

“Russia has chosen to expel Swedish diplomats who have acted within the framework of the Vienna Convention and conducted customary diplomatic activities in Russia,” Billström said in a statement.

The foreign minister also deplored the closure of the Swedish consulate in Saint Petersburg, describing it as “a driving force in the bilateral people-to-people co-operation between Russia and Sweden”.

“Today’s decision is therefore a further confirmation of the negative political developments in Russia and the country’s international isolation,” he said.

Ties with Western countries have come under unprecedented pressure after Russian President Vladimir Putin sent troops to Ukraine in February 2022 and the West introduced unprecedented sanctions against Moscow.

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Sweden’s central bank raises key interest rate to 4 percent

Sweden's central bank hiked the key interest rate on Thursday by 0.25 percentage points from 3.75 to 4 percent, while flagging that further rate hikes are likely.

Sweden's central bank raises key interest rate to 4 percent

This is the eighth interest rate hike in a row, and was broadly expected by Swedish banks and financial experts. Sweden’s key interest rate has not been this high since October 2008.

The bank also warned in a statement that Thursday’s interest rate hike may not be enough to curb inflation, and that more hikes are likely.

According to its prognosis for the coming years, the bank expects the average key interest rate to hit 4.03 percent in the last quarter of 2023 and 4.10 percent by the third quarter of 2024, before dropping slightly to 4.04 percent by the third quarter of 2025.

It expects the average key interest rate to dip under the 4 percent mark in 2026, with an average rate of 3.69 percent in the third quarter of that year.

The bank also believes that the krona is undervalued.

“At the moment, the krona is undervalued,” it wrote in a separate statement. “Economic developments in Sweden relative to other countries suggest it will begin to gain value in the future, although it is difficult to predict how much and when.”

It believes that the krona’s weakening may be due in part to speculators, adding that this means that the krona’s value “could strengthen relatively quickly once this situation turns around.”

Having said that, it believes that the primary factor behind the weakening of the krona is differences in interest rates between the USA and other central banks.