Swedish Riksbank: Steady as She Goes

October 24, 2013

Four repo rate cuts were implemented between December 2011 and December 2012 but not since then.  A statement released by the executive board of the Riksbank reaffirms that “the repo rate is not expected to be raised until the end of 2014.”  The “low” inflation rate is continuing, and economic improvement, especially in the labor market, is noted, too.  Core inflation is projected to average 0.9% this year, 1.3% in 2014, 1.9% in 2015 and 2.0% in 2016.  Forward guidance shows the repo rate eventually averaging 2.24% in the final quarter of 2015 and 2.88% in 4Q16.  Real GDP is seen expanding only 0.7% on average in 2013 but 2.6% next year, 3.5% in 2015 and 2.7% in 2016.  Monetary stimulus will be partly responsible for this quickening pace, which in turn will enable a normalization process in the Riksbank interest rate to proceed.  Two of the six board members, Ekholm and Floden, voted to cut the repo rate now to 0.75; they have dissented similarly in the past.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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