PARIS (MNI) – Sweden’s central bank, the Riksbank, on Wednesday
left its repo rate unchanged at 1.5%, pausing after having cut rates by
25 basis points at its previous two meetings.
Despite some “positive signs” in activity following a sharp
slowdown of Sweden’s economic growth last year, “inflation is low and
expected to remain so over the coming year,” the Riksbank said in its
monetary policy statement.
“Monetary policy needs to remain expansionary to support the
recovery,” it said. “The Executive Board of the Riksbank has therefore
decided to hold the repo rate unchanged at 1.50%.”
The bank also left its projected repo rate path unchanged. After
its last monetary policy meeting in February, it had said the rate would
stay at 1.5% “until sometime in 2013.”
The decision to keep rates unchanged was not unanimous. The two
customary dissidents on the Riksbank’s board, deputy governors Karolina
Ekholm and Lars Svensson, both advocated for a 50 basis point rate cut
to 1.0% and argued that the repo rate path should be lowered.
Recent economic sentiment indicators have shown a marked
improvement since the Riksbank cited weakening economic activity in
Sweden as justification for its 25 basis point cut in February. The
KI/NIER Economic Tendency survey, for example, rose sharply from 93.5 to
101.8 between January and March, pointing to above-trend growth.
Weak export data, cited as a major concern of the central bank’s
executive board at its last meeting, have also shown signs of
stabilizing, and retail sales have registered a surprise increase.
At 1.5% in March, inflation remained in line with the bank’s
projections and below its target rate of 2.0%.
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–Paris newsroom, +331-42-71-55-40; paris@marketnews.com
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