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Swedish central bank keeps rate stagnant as inflation and economic growth levels remain weary

Wednesday, 03 July 2013
Swedish central bank, the Riksbank, has left the key interest rates unchanged as most players in the economy and the markets had everyone expected.

In a press release, the Riksbank writes that the Swedish economy is on the way to a recovery. At the same time, inflation is expected to be low for a while longer. Economic developments in Sweden and abroad have been largely in line with the Riksbank’s most recent forecast in April.

Therefore, the repo rate needs to remain low to support the economy and enable inflation to rise to the target of 2 per cent. The Executive Board of the Riksbank has therefore decided to hold the repo rate unchanged at 1 per cent. Gradual increases in the repo rate are expected to begin during the second half of 2014, as assessed earlier, the bank writes.

Economic developments around the world are in different phases. In the United States, GDP is continuing to grow at a modest pace, while developments in the euro area are weak. Several euro area countries need to implement major reforms, which will take many years, although there are signs that developments are moving in the right direction. Moreover, there are good conditions for an increase in growth in the United States. The economic outlook abroad as a whole is expected to improve gradually over the coming years, writes the Riksbank.

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