Sweden keeps repo rate at 1 percent

Sweden keeps repo rate at 1 percent
Citing a weak growth in the Swedish economy and low inflationary pressures, Sweden's central bank announced on Wednesday that the current repo rate of one percent will remain unchanged.

The Riksbank stated that the development was in line with its own predicted outcomes from December, and that the repo rate would likely maintain the low level over the coming year.

“The Swedish economy is still being affected by the economic crisis in the euro area,” the Riksbank said in a statement, but added that there are some positive signs.

“The unease on the financial markets has declined, and households and companies, both in Sweden and abroad, have become slightly more optimistic with regard to the future.”

The Riksbank noted that as developing countries continue to emerge and the US continues to recover, the implication is that Sweden’s GDP will slowly increase over the year.

Two of the bank’s six governors, however, were keen on lowering the rate.

Karolina Ekholm wanted the Riksbank to cut the repo rate down to 0.75 percent, with Lars E.O. Svensson advocating a drop to 0.5 percent.

However, the bank explained in its decision that the repo rate must remain low to support Sweden’s economy and to ensure the country reaches its 2-percent inflation target.

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