Sweden's Riksbank kept its key benchmark repo rate unchanged at -0.5 percent at a meeting held on Wednesday. The central bank has, however, left doors open for rate cuts in the future, adding that uncertainty over Brexit has delayed future rate hikes.
In a statement that followed, Riksbank said that the Swedish economy continues to strengthen, but that there is “considerable uncertainty” over developments abroad. The Riksbank said that a highly expansionary monetary policy is needed to provide support to the Swedish economy and rising inflation and that the bank stands ready to ease if this is needed to safeguard the inflation target.
Swedish inflation slowed more than estimated in May. The inflation rate according to CPIF was 1.1 percent y/y in May 2016, as compared to the previous month’s 1.4 percent and consensus expectations of 1.2 percent. After four years mainly spent below 1 percent, the Swedish CPIF bounced sharply to 1.5 percent at the beginning of the year, taking a step towards the Riksbank's two percent inflation target.
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