Swedish Monetary Policy Unchanged in February


At its February 13th, 2014 meeting, the Executive Board of the Riksbank has decided to leave the repo rate on hold at 0.75 percent, after last meeting’s cut. The Bank said that the prospects for 2014 are good, economic activity is strengthening and the labour market is improving, but inflation is expected to be low over the coming yea, thus no rate hikes are expected until the beginning of 2015.

Excerpt from the statement by the Executive Board of the Riksbank:

The economic outlook and inflation prospects in Sweden and abroad are well in line with the Riksbank's forecast from December.  

After just over a year of weak growth, the prospects for the Swedish economy are now good. The labour market situation has improved and confidence among Swedish households and companies has risen to levels better than normal. This, together with a gradual increase in demand abroad creates the conditions for GDP growth to rise and labour market to improve further this year.

Although economic activity is strengthening, inflation in Sweden will remain low for some time. The decline in inflation in recent years has been broad and price increases have been low in relation to developments in companies' costs. As demand in Sweden and abroad increases, however, companies are expected to gradually raise their prices. The Riksbank's expansionary monetary policy will contribute to supporting economic activity. CPIF inflation is thus expected to attain 2 per cent in 2015.

The revisions to the forecasts are minor in relation to the assessment in December. The risks linked to household indebtedness have not changed very much either. The repo rate and repo-rate path are therefore held unchanged. The repo rate needs to remain at a low level until inflation picks up and the recovery is on firmer ground. Slow increases in the repo rate will not begin until the start of 2015.

Swedish Monetary Policy Unchanged in February


Riksbank | Joana Taborda | joana.taborda@tradingeconomics.com
2/13/2014 9:11:20 AM