Swedish Central Bank Holds Rates


At its April 9th, 2014 meeting, the Executive Board of the Riksbank decided to leave the repo rate unchanged at 0.75 percent. Although the repo rate is expected to remain at this low level for around a year, the central bank said it now saw a greater possibility that it may need to cut rates in the near-term as inflation remains weak.

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

Economic activity is clearly strengthening, but inflation is expected to remain low for some time. Monetary policy needs to remain expansionary for inflation to rise towards the target. The Executive Board of the Riksbank has therefore decided to hold the repo rate unchanged at 0.75 per cent. The repo rate is expected to remain at this low level for around a year. It is considered appropriate to wait until inflation picks up before beginning to raise the repo rate. The repo-rate path has been adjusted down somewhat and reflects a greater probability of a repo-rate cut in the near term compared with the assessment made in February.

Although economic activity is clearly strengthening, inflation is expected to remain low for the rest of the year. Compared with the assessment made in February, the inflation forecast has been revised down somewhat, primarily for the coming months. Price increases have been low for some time relative to developments in companies' costs. However, as economic activity strengthens, companies are expected to be able to raise their prices to a greater extent. CPIF inflation is expected to begin to rise towards the end of the year and to be close to 2 per cent during the latter part of 2015.

Monetary policy needs to remain highly expansionary to contribute to inflation rising towards the target. Although inflation has been somewhat lower than expected, only a minor revision has been made to the inflation forecast. The Executive Board of the Riksbank has therefore decided to hold the repo rate unchanged at 0.75 per cent. It is judged appropriate to begin gradually raising the repo rate in one year's time, when inflation has picked up.

As economic activity strengthens, inflationary pressures are expected to rise. However, it is uncertain how quickly inflation will rise, particularly as it has been weaker than expected for some time now. The repo-rate path has therefore been adjusted down somewhat and reflects a greater probability of a repo-rate cut in the near term compared with the assessment made in February.

Swedish Central Bank Holds Rates


Riksbank | Joana Taborda | joana.taborda@tradingeconomics.com
4/9/2014 9:18:00 AM