• Sweden's news in English

Riksbank leaves interest rates unchanged

TT/David Landes · 16 Dec 2009, 09:52

Published: 16 Dec 2009 09:52 GMT+01:00

Facebook Twitter Google+ reddit

In announcing its decision to leave the repo rate unchanged, Sweden’s central bank cited the continuing economic recovery and low inflationary pressures.

“The world economy is continuing to improve and this benefits economic developments in Sweden,” the bank said in a statement.

“Households and companies have become more optimistic regarding future developments and consumption is increasing.”

The bank revised its growth forecasts for 2010 upwards, now projecting Sweden’s economy will grow by 2.7 percent instead of the 2.5 percent forecast in October.

At the same time, however, the bank expected Sweden’s GDP to grow by only 3.5 percent in 2012, down from the previously forecast 3.7 percent.

The Riksbank added, however, that uncertainty remains, citing weak industrial production as one reason for continued caution regarding the pace of the current recovery.

The bank also left the forecast for the benchmark rate unchanged, saying that the repo rate would “remain at this low level until autumn 2010 and then to be raised towards more normal levels”.

In projecting the expected future interest rate path, the Riksbank said the repo rate will be close to 0.4 percent by the fourth quarter of 2010. A year later, it will have risen to around 2.4 percent before reaching 4.1 percent by the fourth quarter of 2012.

The future direction Sweden’s monetary policy will ultimately depend, however, on how economic developments abroad and in Sweden affect inflation and economic activity in Sweden, the bank added.

The Riksbank also noted that the labour market doesn’t appear as weak as in previous forecasts, but that unemployment is nevertheless expected to rise, which will keep inflationary pressures low for the coming year.

Inflation expectations were also lower in the bank’s new forecast, expected to reach 0.8 percent next year before jumping to 3.0 percent in 2011.

Story continues below…

Earlier projections had inflation hitting 0.9 percent in 2010 and 3.3 percent in 2011.

The Riksbank board was not unanimous in its decision to hold rates at 0.25 percent, with Deputy Governor Lars E.O. Svensson advocating a further cut to 0.0 percent and a repo rate path 0.25 percent below the bank’s accepted scenario.

TT/David Landes (news@thelocal.se)

Facebook Twitter Google+ reddit

Your comments about this article

21:07 December 16, 2009 by Weekend_warrior
The future direction of Sweden's monetary policy will only reflect, as will Europe, whether or not the US decides to raise rates (expectations of June 2010).

Meanwhile the banks will continue to borrow money for free and not lend, because why would they? I wouldn't. And the government will continue it's tedious balance between growth and inflation, and keeping everyone looking left while Goldman's White House set the cards up for the next trillion dollar bubble on Carbon Trading.
Today's headlines
Here's how slow Sweden's high-speed trains are getting
A Swedish SJX2000 high speed train. Photo: Tomas Oneborg/SvD/TT

The high-speed rail journey between the three biggest Swedish cities is about to get longer.

The Local List
12 Swedish words with just awesome literal translations
A filthy-minded lobster, i.e. a snuskhummer. Photo: Gorm Kallestad/NTB scanpix/TT

One of our favourite things about the Swedish language is its wonderful compound words, which range from being utterly bizarre to making perfect sense.

US election
Donald Trump won't get new Ericsson head's vote
Trump pictured at a campaign rally in Florida. Photo: Evan Vucci/AP

The new Swedish-American boss of telecoms giant Ericsson has revealed he will not vote for the Republican nominee in the forthcoming US presidential election.

Swedes named fourth most gender equal in the world
A file photo of men and women pushing prams in Stockholm. Photo: Claudio Bresciani/TT

Sweden has closed 81 percent of its overall gender gap according to the World Economic Forum.

Sweden: Russian warships in the Baltic 'worrying'
Swedish Defence Minister Peter Hultqvist. Photo: Vilhelm Stokstad/TT

Two Russian warships equipped with long-range missiles have entered the Baltic Sea after passing Denmark.

Why businesses are worried about Sweden's drone ban
A drone filming in Stockholm. Photo: Pontus Lundahl/TT

The Local investigates what Sweden's new drone ban could mean for businesses in the country.

This is the new top boss of Swedish Ericsson
Börje Ekholm. Photo: Magnus Hjalmarson Neideman/SvD/TT

Telecoms giant Ericsson has appointed a new CEO after a turbulent year for the company.

These are Sweden's best universities: ranking
A new university ranking has been released. Photo: Cecilia Larsson Lantz/Imagebank.sweden.se

At least according to this global ranking, which picks 12 Swedish universities among the top-1000.

Swedish pharmacies restrict paracetamol sales for teens
The move is intended to cut paracetamol overdoses. Photo: Nora Lorek/TT

Sweden's pharmacies are banning teens under 18 from buying more than one pack of pills at a time.

Rwandan genocide suspect held in Sweden
A memorial centre in Kigali, Rwanda. Photo: Ben Curtis/AP

A man has been arrested in Sweden suspected of involvement in the 1994 Rwandan genocide which claimed 800,000 lives.

Sponsored Article
Stockholm: creating solutions to global challenges
Sweden cuts 2016 refugee forecast
Sponsored Article
Last chance to vote absentee in the US elections
Is Game of Thrones coming to Sweden?
Property of the week: Kungsholmen, Stockholm
Blog updates

6 October

10 useful hjälpverb (The Swedish Teacher) »

"Hej! I think the so-called “hjalpverb” (auxiliary verbs in English) are a good way to get…" READ »


8 July

Editor’s blog, July 8th (The Local Sweden) »

"Hej readers, It has, as always, been a bizarre, serious and hilarious week in Sweden. You…" READ »

Sponsored Article
This is Malmö: Football capital of Sweden
Will Swedes soon be looking for fairtrade porn?
Sponsored Article
Where is the Swedish music industry heading?
The Local Voices
'I simply don’t believe in nationality'
Why we're convinced Game of Thrones is based on Sweden
People-watching: October 21st-23rd
Sponsored Article
Why you should 'grab a chair' on Stockholm's tech scene
Fury at plans that 'threaten the IB's survival' in Sweden
Sponsored Article
Swedish for programmers: 'It changed my life'
Analysis & Opinion
Are we just going to let half the country die?
Angry elk chases Swede up a lamp post
Sponsored Article
Top 7 tips to help you learn Swedish
The Local Voices
'Alienation in Sweden feels better: I find myself a stranger among scores of aliens'
Sponsored Article
‘Extremism can't be defeated on the battlefield alone’
People-watching: October 20th
The Local Voices
A layover at Qatar airport brought this Swedish-Kenyan couple together - now they're heading for marriage
Sponsored Article
Stockholm: creating solutions to global challenges
Swede punches clown that scared his grandmother
Sponsored Article
Why you should 'grab a chair' on Stockholm's tech scene
Fans throw flares and enter pitch in Swedish football riot
Sponsored Article
Where is the Swedish music industry heading?
Could Swedish blood test solve 'Making a Murderer'?
Sponsored Article
One expat's strategy for making friends in Stockholm
Swedish school to build gender neutral changing room
Sponsored Article
Nordic fashion in focus at Stockholm University
People-watching: October 14th-16th
Man in Sweden assaulted by clowns with broken bottle
Nobel Prize 2016: Literature
Watch the man who discovered Bob Dylan react to his Nobel Prize win
Record numbers emigrating from Sweden
People-watching: October 12th
The Local Voices
'Swedish startups should embrace newcomers' talents - there's nothing to fear'
How far right are the Sweden Democrats?
Property of the week: Triangeln, Malmö
The Local Voices
Syria's White Helmets: The Nobel Peace Prize would have meant a lot, but pulling a child from rubble is the greatest reward
jobs available