Recent strength of the krona key prompt behind Riksbank repo cut
The Swedish Riksbank has followed up its recent hints of more policy action by cutting its repo rate from the -0.1% rate it was reduced to only last month to -0.25%. It also expanded its government bond purchase programm…
The Swedish Riksbank has followed up its recent hints of more policy action by cutting its repo rate from the -0.1% rate it was reduced to only last month to -0.25%. It also expanded its government bond purchase programme by a further SEK30bn.
Capital Economics notes ....
The statement alongside the decision made it pretty clear that the key prompt was the recent strength of the krona, which has risen by 5% against the euro over the last month.
The Riksbank expressed concern that further rises could halt or reverse the recent modest rise in inflation. Looking ahead, the Riksbank now expects the repo rate to remain at -0.25% at least until the second half of next year.
But it has stressed again its preparedness to loosen policy again and further rises in the krona against the euro as the ECB's QE programme progresses will surely prompt both further rate cuts and bigger asset purchases.
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