Sweden: Riksbank makes fourth consecutive decision to leave repo rate unchanged
September 5, 2013
At its 5 September monetary policy meeting, the Central Bank (Riksbank) made a decision to keep its repo rate unchanged at 1.00% for the fourth consecutive time at a meeting. This decision is what the markets had expected. According to the Executive Board, the repo rate must remain at 1.00%, "to give continued support to the economic upturn and to contribute to inflation rising to the target of 2%." Moreover, the Board does not expect the repo rate to increase before the end of 2014. Four of the six members of Riksbank's Executive Board voted in favor of leaving the repo rate unchanged at 1.00%, while the other two advocated for lowering the policy rate by 0.25 percentage points.
Riksbank pointed out that there are signs of improvement in the Euro area, which would in turn raise demand for Swedish exports and increase household consumption. Regarding price developments, Riksbank acknowledged that inflation is expected to remain low for a while to come. The Bank sees inflation remaining below its 2.0% target in 2013 and in 2014.
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