2 Jul 2015
Riksbank deepens into negative rates
FXStreet (Edinburgh) - The Nordic central bank has surprised markets today after it has lowered the benchmark rate to -0.35% from -0.25% at today’s monetary policy meeting.
In addition, the Riksbank increased its purchases of sovereign bonds to SEK45 billion from September until year-end.
The central bank has also lowered its forecasts for the Swedish economic growth. It now sees the economy expanding 2.9% in 2015 (from 3.2%), 3.6% in 2016 (from 3.4%) and 2.6% in 2017 (from 2.7%). Regarding inflation, the Riksbank now expects consumer prices to rise 0.2% during the current year and 2.0% in 2016, down from 0.3% and 2.1%, respectively.
The central bank justified the decision in the recent strength of the krona due to overseas events, mainly from Greece, and its potential effects on domestic prices, despite stressing that the current looser monetary policy has been pushing prices higher. The Riksbank also added that it remains ready to incur in further easing in case of need.
In addition, the Riksbank increased its purchases of sovereign bonds to SEK45 billion from September until year-end.
The central bank has also lowered its forecasts for the Swedish economic growth. It now sees the economy expanding 2.9% in 2015 (from 3.2%), 3.6% in 2016 (from 3.4%) and 2.6% in 2017 (from 2.7%). Regarding inflation, the Riksbank now expects consumer prices to rise 0.2% during the current year and 2.0% in 2016, down from 0.3% and 2.1%, respectively.
The central bank justified the decision in the recent strength of the krona due to overseas events, mainly from Greece, and its potential effects on domestic prices, despite stressing that the current looser monetary policy has been pushing prices higher. The Riksbank also added that it remains ready to incur in further easing in case of need.