Swedish Rate Hike

February 15, 2011

The Riksbank Executive Board has implemented a fifth repo rate increase of 25 basis points following similar increments last July 1, September 2, October 25 and December 15.  The rate level becomes 1.5%, compared to a cyclical low of 0.25%.  A statement released by the central bank cites the same four reasons for today’s move as given after the previous meeting in December:

  1. To stabilize CPI inflation near the 2% target
  2. To avoid excessive resource utilization
  3. To slow household borrowing, and
  4. To contain the risk of rising structural economic imbalances.

As in December, Board members Ekholm and Svensson dissented, preferring no rate hike now and recommending a repo rate path of rise to 3.25% by early 2014 instead of 3.6% as sought by the four-person majority.  The new statement revises upward projected inflation and core inflation slightly and forecasts GDP growth of 4.4% this year, 2.4% in 2012 and 2.5% in 2013.  Minutes of today’s meeting will be published at the end of this month.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.



Comments are closed.