Friday, October 28, 2011

Sweden Central Bank Holds Interest Rate at 2.00%

Sweden's Riksbank held its benchmark repo rate unchanged at 2.00%.  The Bank said: "The difficulties in resolving the public finance crisis in Europe has led to increased uncertainty regarding the future. In Sweden, growth is expected to be slightly weaker in the coming period. At the same time, inflationary pressure is low. The Executive Board of the Riksbank has therefore decided to hold the repo rate unchanged at 2 per cent and to wait to increase it until sometime next year."

The Riksbank previously increased the benchmark repo rate by 25 basis points to 2.00% at its July meeting, after also increasing by 25 basis points at its April meeting this year.  Sweden reported annual inflation of 3.2% in September, compared to 3.4% in August, 3.3% in July, 3.1% in June, and 3.3% in May, the same as April, and up slightly from 2.9% in March; while also above the Riksbank's inflation target of 2.0%.

Sweden's economy expanded 0.9% q/q in Q2 (0.8% in Q1), placing annual GDP growth at 4.9% (6.4% in Q1).  The Swedish Krona (SEK) has gained about 5.5% against the US dollar so far this year, while the USDSEK exchange rate last traded around 6.38.


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