Sweden’s Riksbank has maintained zero rates until the beginning of 2024, despite the economy performing better than feared, according to Bloomberg. The rate decision reflects an economic outlook in which the central bank expects to take years to achieve an inflation target of 2%, which stood at 0.5% in December.
- Riksbank expects the severity of the current crisis to prolong achieving the inflation target and require continued “extensive” monetary support.
- With inflation remaining below target, policymakers hinted of possible rate cuts, despite Governor Stefan Ingves stating a preference for bond purchases.
- The Central Bank also maintained its quantitative easing program.
- Sweden’s economy was less battered by the pandemic as the GDP contracted by only 2.8%, below an average of almost 7% in the Eurozone.
- Chief economist at SEB Robert Bergqvist sees the Riksbank’s decision as a “touch of hawkishness” that “opens the door for a tapering of quantitative easing holdings.”
Swedish Krona is currently gaining. USDSEK is down 0.09%
