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ECONOMY

Sweden holds on to record low interest rate

Sweden's national bank (the Riksbank) has announced that the nation's record low key interest rate will remain unchanged at -0.35 percent.

Sweden holds on to record low interest rate
Swedish kronor. Photo: Fredrik Sandberg/TT
The Riksbank has also said it is expanding the country's bond-buying programme, with a further 65 billion kronor ($766 million) spent on the project. 
 
The Nordic nation first slashed its interest rate – the repo – below zero in February in a landmark decision. It's national bank continued to cut rates in subsequent months, with the -0.35 rate introduced in July.
 
The Riksbank is hoping that its financial strategy will boost inflation in order to raise the price of everyday goods and services in Sweden which have been stagnant for two years. It has argued that this in turn will improve the country's economic prospects.
 
In a statement following Wednesday's announcement, the bank said that “economic activity is strengthening and inflation is showing a clear upward trend”.
 
The bank said that inflation was still on course to be close to two percent in 2016.
 
However it explained that it was keeping rates low due to “considerable uncertainty regarding the strength of the global economy”.
 
“Compared with previous forecasts, inflation abroad is deemed to be slightly lower and many central banks are expected to pursue an expansionary monetary policy for a longer time,” the text continued.
 
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.
 
However Wednesday's decision to hold the repo at -0.35 is bad news for savers in Sweden who will continue to see no return on any nest eggs stashed in basic savings accounts. 
 
But those wishing to borrow money to buy properties or shares will continue to benefit from the record low rates.
 
Sweden's bond buying programme is a version of quantitive easing, which in simple terms involves borrowing money to inject back into the economy. 
 
The Riksbank said that the additional bond purchases announced on Wednesday would bring the total figure bought to 200 billion kronor by the end of 2016.
 
The krona was stable after the announcement but the Swedish market continued to fall, having previously experienced jitters following a forecast from the National Debt Office.

ECONOMY

Swedish bank’s IT fault puts customer accounts in the red

A technical problem at Sweden's Swedbank on Thursday night gave customers a nasty surprise, with their account balances inexplicably going negative, payments impossible, and Swish payments no longer working.

Swedish bank's IT fault puts customer accounts in the red

By 11.30pm, more than 2,000 Swedbank customers had reported the fault to the site Downdetector, and the problem was still not solved by 17.00pm on Friday. 

“We have an ongoing IT disruption where certain customers see an incorrect balance on their accounts,” a message on the bank’s app read. “The reason is a planned update to our internal systems which went wrong. We apologise, of course, for that and are working as quickly as possible to fix the problem.” 

The Swish payment service has also been affected, with the service, which is owned collectively by Swedish banks, reporting on its site that there was a “technical disruption at Swedbank and Sparbank which might affect Swish payments from these banks”. 

Some Swedbank customers posted their negative account balances on Twitter, expressing shock at the incorrect figures. 

The disruption comes at the worst possible time for many Swedes. Many people are paid on the 25th of the month, meaning this Friday marks the start of the payday weekend. Many will have also scheduled their bill payments for this Friday. 

Marko Saric from Malmö saw his account balance drop by 1.2 million kronor, going half a million kronor into the red. 

“It’s just totally crazy,” he told SVT. “We were going to go out and shop for the weekend. It’s lovely weather and the kids want to go out, but we can’t use our card. We’ve got no cash. Everything is in the bank.” 

“You’re just completely blocked. Colleagues need to make emergency food parcels for you. It’s just crazy that something like this should happen.” 

In its statement, the bank assured customers that their money was “secure”, and that the bank still had the correct information on what their account balance should be. 

“Customers who feel that they have suffered economic damage as a result of the disruption should contact the bank,” the message said.

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