Sweden: Riksbank leaves repo rate unchanged in July
July 3, 2013
At its 3 July monetary policy meeting, the Central Bank (Riksbank) left the repo rate unchanged at 1.00% for a third consecutive meeting, a decision that was in line with market expectations. According to the Bank, "the repo rate needs to remain low to support the economy and enable inflation to rise to the target of 2 per cent". Four out of six members of the Riksbank's Executive Board voted in favour of leaving the repo rate unchanged at 1.00%, outvoting two other members who advocated lowering the policy rate.
Riksbank pointed out that growth in the United States remains modest, whereas the Eurozone remains the biggest downside risk to the global economic outlook. At a domestic level, the Bank stated that the Swedish economy "is on the way to a recovery" amid strong households' finances and rising employment.
Regarding price developments, Riksbank acknowledged that inflationary pressures remain subdued and that inflation "is expected to be low for a while longer". Indeed, the Bank expects inflation to remain below its 2.0% target this year and the next.
Riksbank projects the average repo rate to remain at 1.00% in both 2013 and 2014. FocusEconomics Consensus Forecast panellists see the repo rate at 0.93% by the end of this year. For 2014, panellists expect the policy rate to rise to 1.23%.