Wednesday, October 27, 2010

Sweden's Riksbank increases repo rate 25bps to 1.00%

The Swedish Central Bank (The Riksbank) increased the repo rate by 25bps to 1.00% from 0.75%, increasing the deposit rate to 0.25% from 0.00%, and increasing the lending rate to 1.75% from 1.50%. The Riksbank noted that the increase was due to an increase in economic activity (and associated improvement in inflationary pressure) but noted, given the risks to the global economic recovery, further increases would likely be limited:
The Swedish economy is growing rapidly. Inflationary pressures are low, but are expected to increase as economic activity strengthens. In order to stabilise inflation at a level close to the target of 2 per cent and to achieve a normal level of resource utilisation, there is a need to gradually increase the repo rate. However, as development abroad remains uncertain it will not be necessary to raise the repo rate as much in the years ahead. 
The Riksbank's next monetary policy meeting will take place on the 14th of December 2010.



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