Sweden: Riksbank announces new measures to buttress economy
On 16 March, the Riksbank announced a raft of new emergency measures to support the economy, in the face of significantly deteriorating economic prospects due to the coronavirus (Covid-19) pandemic.
The Central Bank said it would increase purchases of securities, including government, municipal and mortgage bonds, by up to SEK 300 billion this year. In addition, the Riksbank cut the lending rate for overnight loans to banks to 0.20 percentage points above the repo rate, down from 0.75 percentage points above the repo rate, which itself was left at 0.00%. Finally, the Riksbank promised banks unlimited credit with a maturity date of three months at an interest rate of 0.20 percentage points above the repo rate. Taken together, these measures will make it easier and more affordable for struggling businesses and consumers to obtain the finance they need during the pandemic.
Regarding the coming weeks, the Riksbank stated it is “prepared to take further measures and supply the necessary liquidity even between the ordinary monetary policy meetings. All the Riksbank’s tools can be put to use. Purchases of bonds issued by non-financial corporations may also be considered.”
The outcome of the next monetary policy meeting will be announced on 28 April.