Sweden: Riksbank keeps repo rate on hold
October 24, 2013
At its 24 October monetary policy meeting, the Central Bank (Riksbank) left the repo rate unchanged at 1.00% for the fifth consecutive meeting, a decision that met market expectations. Four of the six members of the Executive Board voted in favor of keeping the repo rate unchanged. The other two members advocated for lowering the repo rate to 0.75%. The next monetary policy meeting will be held on 16 December.
According to Riksbank, the latest international developments point to a brighter outlook for the Swedish economy. The Bank projects "gradually higher" growth in Sweden. Based on the more positive outlook, the Board acknowledged that keeping a low interest rate would boost household consumption, which, in turn, would create the necessary conditions for an economic upturn and, "contribute to inflation rising towards 2 per cent." However, the Bank doesn't expect inflation to increase to 2.0% before 2015.
Riksbank projects that the average repo rate will remain at 1.00% both this year and next. FocusEconomics Consensus Forecast panelists see the repo rate at 0.93% at the end of this year. For 2014, panelists expect the policy rate to rise to 1.23%.
Author: Dirina Mançellari, Senior Economist