Swedish Riksbank Makes No Further Policy Changes
September 7, 2016
Sweden’s repo rate stays at negative 0.5%, having been cut from zero by 10 basis points initially in February 2015, 15 bps in March 2015, 10 bps in July 2015 and, most recently, 15 bps earlier this year in February. A program of asset purchases that had been last expanded by SEK 45 billion to SEK 245 billion to be completed by end-2016 was also not modified further. In a released statement today from the Riksbank’s central bank Executive Board, officials said that prospects for continuing solid growth and a gradually rising rate of inflation back to target remained largely unchanged since the review two months ago. The inflation forecast is contingent, however, of keeping monetary policy very accommodative. “Not until the second half of 2017 does the Executive Board consider it to be appropriate to begin slowly increasing the repo rate, when inflation is expected to be close to 2 per cent.” Officials bumped up projected inflation by 0.1 percentage point each to 1.1% this year and 1.8% in 2017 but reduced projected GDP growth this year to 3.2% from 3.6%.
Officials noted that considerable uncertainty still surrounds the inflation forecast and reiterated a readiness to augment monetary stimulus further if necessary. That warning is balance by acknowledgement that negative interest rates entail risks that need monitoring.
Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Swedish Riksbank
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