• Sweden's news in English
 
app_header_v3
Sweden gets record low negative interest rate
Sweden's Riksbank in Stockholm. Photo: TT

Sweden gets record low negative interest rate

TT/The Local · 12 Feb 2015, 09:47

Published: 12 Feb 2015 09:47 GMT+01:00

In a statement, it said that the reason for the move was continuing low inflation.
 
"The recovery in the world as a whole is expected to continue in the coming years, although it is slow. Since December, however, the risks of weaker growth abroad have increased. Oil prices have fallen, which is positive for global growth, but it will also lead to low global inflation," the bank said.
 
It is the first time that there has been a negative interest rate in Sweden.
 
Negative rates work differently to positive interest ones when borrowers usually pay money lenders an interest rate, usually an annual percentage on the total amount of money borrowed. Savers putting money into a bank can normally expect to earn interest on that cash.
 
When interest rates are negative, this relationship is reversed, so lenders - i.e. banks - have to pay to lend money or to make an investment.
 
The basic idea behind negative rates is to stop organisations or people from making risky investments or transactions that could impact on the wider economy.
 
The Riksbank hopes that by lowering the interest rate, this will help boost inflation and increase the country's money supply. By allowing companies to borrow money very cheaply it is hoped that this will lead to increased production and higher inflation, while further reducing unemployment in Sweden, which currently stands at 7.8 percent.
 
It previously lowered rates from 0.25 percent to what was then a record low of zero percent in October 2014, stating that while the Swedish economy was "relatively strong" and economic activity was continuing to improve, inflation was not happening quickly enough.
 
Story continues below…
The latest move is likely to affect banking customers who may find banks seeking to reduce their costs in other areas to make up for low interest rates, such as by further lowering interest rates on savings accounts.

"The banks... will try to make up for it somehow," one financial expert Annika Creutzer told Swedish broadcaster SVT on Thursday.

"Probably they will not lower mortgage rates as much as the repo rate is being lowered. But it could affect the interest rate on savings accounts, which will probably be very low, if they offer any interest at all."

The krona depreciated sharply against both the euro, the pound and the dollar after the latest announcement. 
 
For Swedes and foreigners living in Sweden drawing a salary in kronor, this means that your money won't go as far if you visit the US or other European countries, but it could be the best time to invite friends from those places to visit as Sweden won't seem so expensive for them and their holiday money will go further.

For more news from Sweden, join us on Facebook and Twitter.

TT/The Local (news@thelocal.se)

Your comments about this article

Today's headlines
 Ibrahimovic 'will not go to Manchester United' - agent
Ibrahimovic is pondering his next move. Photo: TT

According to Mino Raiola, the agent of Swedish superstar footballer, Zlatan Ibrahimovic, his client will not be heading to Old Trafford to link up with Jose Mourinho, Manchester United's new manager.

More flight delays hit Swedish airport
For some flights, the problems have led to up to two hours of delays. Photo: TT

Travellers at Stockholm’s Arlanda airport were beset again with delays on Saturday afternoon after technical problems with flightplan management software.

Video
The top reactions to Swedish high heels handyman video
Andersson was in agony after a day of laying floors in high heels. Photo: Emil Andersson

What did The Local's readers think about this viral clip challenging sexist beauty ideals?

Transport authorities call for probe into tech glitch
SAS aircraft grounded at Arlanda airport last week. Photo: Johan Nilsson/TT

But officials say it was not sabotage that caused last week's network failure, which knocked out large parts of Swedish air traffic.

Why northern Swedes get the hots for sex toys
File photo of handcuffs. Photo: Gunnar Lundmark/SvD/TT

Where in Sweden do people buy the most sex toys? Kiruna in the far north, apparently.

Royal baptism day for Sweden's Prince Oscar
Prince Oscar with Archbishop Antje Jackelén. Photo: Jonas Ekströmer/TT

UPDATED: Royalty, dignitaries and other esteemed figures took to Stockholm's Royal Chapel for the ceremony.

Giant replica of Swedish 18th century ship up for sale
The Götheborg setting sail from Stockholm in 2008. Photo: Claudio Bresciani / TT

A replica of a doomed Swedish merchant vessel that sank in 1745 within sight of its home port of Gothenburg has been put up for sale.

Border checks
First migrants make it from Denmark to Sweden on foot
The Öresund bridge between Sweden and Denmark. Photo: Erland Vinberg/TT

Dozens of attempts have been made, but this is the first successful crossing since Sweden introduced ID and border checks.

Brexit
Poll: Swedes are worried about Brexit consequences
The possibility of Brexit has Swedes worried about the EU's future. Photo: Lars Pehrson/SvD/TT

Swedes are worried about what may happen both at home and abroad if Britain votes to leave the EU in June.

The Local Recipes
Fend off the bad weather with a Swedish beetroot salad
Beetroot salad with cumin and feta. Photo: John Duxbury/Swedish Food

Rain, rain, go away.

Sponsored Article
How to find student housing in Malmö: 5 tips
Gallery
The best, cutest and funniest snaps from Prince Oscar's christening
Sponsored Article
Can you afford to live in Stockholm? (Hint: yes)
Travel
Is this town the best place in Sweden?
Gallery
People-watching: May 25th
Blog updates

27 May

Editor’s blog, May 27th (The Local Sweden) »

"Hej readers, Would you spend a day doing manual labour in high heels? That’s what Swedish…" READ »

 

17 May

What about “att”? (The Swedish Teacher) »

"Hej! It often seems like the small words are the ones that cause the most confusion.…" READ »

 
 
 
Sponsored Article
'Sweden gives artists the space to follow their dreams'
Society
WATCH: Why Swedish handyman wore pink high heels for feminism
Sponsored Article
Stockholm makes it easier for refugees to meet startups
Sport
LIST: Top-ten ridiculous things Zlatan has compared himself to
Business & Money
Why Swedes don't want the euro
Fastighetsbyrån
Gallery
Property of the week: Vika, Falun
Sponsored Article
Food, fun, and reliable sun: Summer in Dubrovnik
National
Is this the most Swedish tattoo ever?
Sponsored Article
How Stockholm startups help new employees feel at home
Gallery
People-watching: May 20th-22nd
National
How to really annoy a Swede abroad
Sponsored Article
'Only soft power can defeat radicalism'
National
How this war veteran is warming hearts in Sweden
Sponsored Article
Why Stockholm attracts so many successful researchers
Gallery
People-watching: May 18th
National
How this Swede's viral ad totally nailed Stockholm's housing crisis
Gallery
Property of the week: Vasastaden, Gothenburg
Sponsored Article
'Sweden gives artists the space to follow their dreams'
Lifestyle
The best Swedish cities for dating
Sponsored Article
Retiring abroad: ensuring your health is covered
Gallery
People-watching: May 13th-15th
Sponsored Article
Can you afford to live in Stockholm? (Hint: yes)
Culture
BLOG: Eurovision as it happened
National
Why a 116-year-old Swede isn't the world's oldest woman
National
Youth unemployment falls in Sweden
Gallery
People-watching: May 11th
Gallery
People-watching: May 6th-8th
Politics
Why Sweden's Greens are in free fall
National
Can these cartoon Swedes help foreigners blend in?
3,350
jobs available
PSD Media
PSD Media is marketing company that offers innovative solutions for online retailers. We provide modern solutions that help increase traffic and raise conversion. Visit our site at:
psdmedia.se