• 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
This Swede is the world's best mosquito catcher
Kristoffer Ekersund. Photo: Private & Johan Nilsson/TT

Yes, there is such a thing as the world championship in mosquito killing.

Which of these two Swedes is Vincent van Gogh's lost twin?
Ivar Arpi, a self-portrait of Vincent van Gogh and Petter Samuelson. Photo: Tomlin Studio & Private

Question: What is even more bizarre than a Swede who really, really looks like Vincent van Gogh? Answer: TWO Swedes who look like Vincent van Gogh.

Date set for verdict in asylum home murder trial in Sweden
The accused in court with a member of his legal team. Photo: Adam Ihse/TT

The trial of a man accused of killing a worker at a home for young refugees earlier this year has ended.

High security as Orlando top of mind at Stockholm Pride
This man might not actually be a police officer. Photo: Vilhelm Stokstad/TT

Nothing is being left to chance, organizers insist.

Fired Ericsson boss to get millions in payouts
Hans Vestberg of Ericsson. Photo: Christine Olsson/TT

Swedish telecoms giant Ericsson has fired its long-standing CEO Hans Vestberg, but said he will receive a severance package amounting to millions of kronor.

Sweden halves migration forecast figures for 2016
Refugees and other travellers arriving in Gothenburg last year. Photo: Adam Ihse/TT

The Swedish Migration Agency has cut its predictions for how many asylum seekers they expect will come to Sweden this year.

Royal husband: 'Britain should not leave the EU'
Sweden's Princess Madeleine and her British-American husband Chris O'Neill. Photo: Mikael Fritzon/TT

What does this British-American husband of a Swedish princess think of Brexit and Hillary Clinton?

Private holiday rentals boom in Sweden
A youth hostel in Sundsvall, central Sweden. Photo: Helena Landstedt / TT

More tourists in Sweden are choosing to rent private homes from the likes of Airbnb – but the hotel industry is just fine.

My Swedish Career
'Fashion is this big industry that can really do better'
Social entrepreneur Stefanie Smith. Photo: Elinor Magnusson

The Local talks to US social entrepreneur Stefanie Smith about transparent fashion and why Sweden's startup scene is about more than just tech.

Sweden to sizzle in the sun for a few more days
The beach at Båstad on Saturday. Photo: TT

The heatwave that hit most of Sweden last week is set to continue until Wednesday at least, according to Swedish weather forecaster, SMHI.

Sponsored Article
Gran Canaria: Where Swedes go to work (and play)
National
Sweden's Hollywood star Alicia Vikander puts her pen in the bottle
Sponsored Article
Why you should attend an international job fair
Gallery
People-watching: July 22nd-24th
The Local Voices
The Jewish Syrian who dreams of rebuilding his country
Blog updates

22 July

After the horror, carry on regardless (Globally Local) »

"This time last week, we were just digesting the horror of the Nice killings, in which…" READ »

 

11 July

Swedish quizzes (The Swedish Teacher) »

"Hej! I have created some quizzes you can take online to test your Swedish skills. Here…" READ »

 
 
 
Sponsored Article
5 reasons you should try dating with The Inner Circle
National
Watch this Swedish weather host leave his fly open... on live TV
Sponsored Article
Why Swiss hospitality graduates are in demand
The Local Voices
'I fled war in Syria. I never expected to be beaten in Sweden'
National
WATCH: Asylum seeker brutally beaten by Swedish bus driver
Technology
Why everyone is talking about Sweden's GTA pride parade
Sponsored Article
What can newcomers learn about Sweden at Almedalen?
National
EU hits truck cartel with record price fixing fine
Sponsored Article
Five easy ways to travel more often
Society
OPINION: Why Sweden is the most extreme country in the world
The Local Voices
'There is equality in accommodation in Sweden: Everyone is suffering'
Sponsored Article
Why expats choose international health insurance
Gallery
Property of the week: Gräsö, Östhammar
Sponsored Article
'Sweden's Lauryn Hill' touches the country's musical soul
Gallery
People-watching: July 15th-17th
National
How to make sure you're not caught out by Sweden's old bank notes
Business & Money
Why Sweden has been named the most innovative country in Europe
Sponsored Article
Five things Americans should know about voting abroad
National
Terror attack: what should you do?
Sponsored Article
Avoid hidden fees when sending money overseas
National
French expat on the moment he was assaulted by a Stockholm bouncer
Sponsored Article
Local guide: the best of Berlin
Technology
Gunman? Nah, smartphone Swede
Sponsored Article
Why you need a EuroBonus American Express Card
The Local Voices
'If the war in Syria ended today, would you go back?'
The Local Voices
‘I feel like I’m living in a grave!’
Gallery
IN PICTURES: Sweden's Princess Victoria celebrates 39th birthday
Gallery
People-watching: July 13th
National
Swedes discover surprise mountain
Politics
What Sweden's home secretary thinks of Britain's new PM
Gallery
Property of the week: Smedjebacken, Dalarna
The Local Voices
'Even xenophobic Swedes can be polite’
Politics
WATCH: A very Swedish take on Brexit...
National
Swede's fury at Daily Mail's Bråvalla 'lies'
Gallery
People-watching: July 8th-10th
National
Sweden and Denmark trolled each other on Twitter and it's hilarious
The Local Voices
'The best time to be smuggled to Europe is August 20th, 2015'
The Local Voices
Swedes: Stop obsessing over your material life and start talking to strangers
3,352
jobs available