-Repo Rate Path Forecast
FRANKFURT (MNI) – Sweden’s Riksbank increased its repo rate by 25
basis points to 1.75% on Wednesday, as expected, although kept its
three-year forecast for the repo rate path unchanged.
“The Executive Board of the Riksbank has decided to raise the repo
rate by 0.25 percentage points to 1.75 per cent to stabilise inflation
close to the target of 2 per cent and to avoid resource utilisation
becoming too high,” the Swedish central bank said in a press release.
As was the case in February, when the central bank last raised
rates, Deputy Governors Karolina Ekholm and Lars Svensson both entered
reservations over the bank’s most recent decision to tighten.
“They preferred a repo rate equal to 1.5 per cent and a repo rate
path that first rises slower and then faster than that of the Update, to
about 3.9 per cent by the end of the forecast period,” the press release
stated. “Such a repo rate path implies CPIF inflation closer to 2 per
cent and a faster reduction of unemployment towards a longer-run
sustainable rate.”
The bank announced that its forecast for the repo rate path was
kept unchanged from the previous monetary policy decision in February:
For 2011, the repo rate is still expected to average 1.8%, rising to
2.8% in 2012 and reaching an average rate of 3.4% one year later.
Euro-Sek initially rallied on the news of an unchanged repo rate
path forecast, rising to Sek8.9359 from Sek8.9114. But it then shed
those gains, slipping to Sek8.9200.
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— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com
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