Sweden keeps record-low interest rate

TT/The Local
TT/The Local - [email protected]
Sweden keeps record-low interest rate
Sweden's central bank first took the decision to slash the interest rate below zero two years ago. Photo: Pontus Lundahl/TT

Sweden's record-low interest rate of -0.50 percent has been extended once again, the country's central bank announced on Wednesday.


While economic activity in Sweden remains strong, the Riksbank said on Wednesday that it would keep the repo rate at -0.50 percent. 

It noted that while inflation was close to the target of 2 percent, the forecast for inflation in 2018 has been revised down slightly.

"Monetary policy needs to remain expansionary for inflation to stabilize close to the target going forward," it said in a statement. 

"The forecast for the repo rate is unchanged since December and indicates that slow repo rate rises are set to be initiated during the second half of this year."

The central bank said that it was important that economic activity continued to be strong and that the Swedish krona did not strengthen too quickly. 

The Riksbank took the landmark decision to slash the key interest rate, the repo, below zero in February 2015, hoping that the strategy would boost inflation to raise the price of everyday goods and services which had been stagnant in recent years, and therefore improve the Nordic nation's economic prospects.

In its long-term forecast, the Riksbank predicted that the repo rate would stay at -0.50 percent until the first quarter of 2019, when it would rise to -0.15. By the first quarter of 2020, the rate is forecast to increase to 0.36.


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