Swedish Riksbank Retains Very Accommodative Stance
February 15, 2017
The central bank executive board
- Kept the repo rate at negative 0.50%.
- Released a statement proclaiming a further rate cut to be likelier in the near term than any hike and forecast the repo rate no higher than zero even as late as the first quarter of 2019.
- Agreed to continue quantitative stimulus (bond purchases) during the first half of this year.
- Expressed a readiness to sell the krona if needed to prevent undue appreciation that could endanger efforts to restore 2% inflation. This vote drew one dissent.
- Revised macroeconomic forecasts. Real GDP is projected to rise 2.5% in 2017, 2.2% in 2018, and 2.1% in 2019. Core inflation climbs 1.7% this year, then 1.8% in 2018 and 2.1% in 2019.
While global and domestic growth prospects are depicted as having improved somewhat, so have risks surrounding the baseline forecast: “There is considerable political uncertainty in several areas of the world, which means that the risks of setbacks have increased.” Riksbank officials expect and are prepared to allow some krona appreciation but will use intervention to prevent an excessive uptrend.
Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Swedish Riksbank