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Swedish central bank cuts key interest rates

Thursday, 06 September 2012
Swedish central bank, the Riksbank has shock the market by cutting the repo rate to 1.25 percent.
Therefore the Riksbank cuts its key policy rate by 0.25 percentage points to 1.25 percent and lowers the interest rate path. The unexpected announcement came on Thursday morning.

"To counter inflation and keep it low for the future, the Riksbank's Executive Board decided to cut the repo rate by 0.25 percentage points to 1.25 percent. The repo rate is expected to remain at this this level until the middle of next year, "the Riksbank said in its press release.

The Riksbank rate cut came as something of a shock. Ten out of twelve economists polled earlier had expected the rate to be left unchanged. Only two economists thought that interest rates would be lowered by0.25 percentage points to 1.25 percent.

Growth in the Swedish economy has so far this year has been surprisingly strong, but now the Riksbank feel it is vital to start suppressing any pressure that might arise as a result of the euro crisis.

"During the summer, the krona has strengthened faster than expected and in addition, productivity has been unexpectedly high. Inflationary pressures are expected to be lower than forecast in July, "the Riksbank said.

In its decision, warns the Riksbank that due to the situation in the debt crisis in Europe remaining uncertain, there could be increased deterioration, which would turn against Sweden.

The last time the Riksbank changed interest rates was in mid-February when the rate was lowered by 0.25 percentage points to 1.50 percent.
By Scancomark.com Team