STOCKHOLM: Sweden’s central bank kept interest rates on hold yesterday and signalled they would remain at current levels into next year due to tentative recovery in the Nordic region’s biggest economy and concerns any policy loosening could inflate hefty household debts.
Economic growth in Sweden came in surprisingly strong in the first quarter after a slowdown at the end of last year as a euro zone grappling with its debt crisis curbed exports.
Sweden’s rate move comes in a week of central bank policy meetings in Europe, as well as Australia, against a backdrop of market uncertainty as the Federal Reserve signals a gradual exit from printing money.
While recent data in Sweden has been mixed, gauges such as consumer and business confidence have brightened while unemployment has eased. Inflation has remained steady, if far below, the bank’s 2-percent target.
“It was what the market had bet almost 100 percent on. For the rate path,” said Johan Javeus, SEB chief strategist. I still think that suggests they will remain on hold also in September. “Credit growth is still a concern for the Riksbank, and while they recognise the inflation is expected to remain low for a long time, they also see signs the economy is on the way to recovery.”
A poll of 19 economists showed all but one expecting the Riksbank to keep its key repo rate unchanged. The Riksbank has left rates on hold at recent meetings after cutting three times in 2012 as the euro zone crisis hit.
Reuters
