Sweden’s central bank held its key interest rate unchanged and boosted its asset purchases on Wednesday, saying that a expansionary monetary policy must be maintained to sustain the positive development in the economy and to preserve the upward trend in inflation.
The Riksbank left its benchmark, the repo rate, unchanged at -0.35 percent for a second straight session. The move was in line with economists’ expectations. The bank last lowered the repo in July, when it cut the rate from -0.25 percent.
Further, the bank said an initial raise in the repo rate will be deferred by approximately six months compared with the previous assessment.
The Executive Board also decided to extend the government bond purchasing programme by an additional SEK 65 billion. Purchases will total SEK 200 billion by the end of June 2016.
“The Executive Board’s assessment is that monetary policy needs to be more expansionary in order to underpin the positive development in the Swedish economy and safeguard the robustness of the upturn in inflation,” the bank said in a statement.
Saying that it was ready to do more to stabilize inflation around 2 percent, the bank said it is ready to take more measures including reducing the repo rate, purchase more assets, intervene in the forex market and launch a bank lending scheme for businesses.
The Riksbank also reckoned that inflation is likely to be a little lower in 2016 and 2017 compared to the previous assessment. CPIF inflation is still expected to be close to 2 percent next year.
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