Sweden must maintain zero percent interest until 2024

Sweden must maintain zero percent interest until 2024

STOCKHOLM, 10 February (Xinhua) – Sweden’s central bank, the Riksbank, decided on Thursday to keep the reference rate at zero percent, despite a recent sharp rise in inflation.

The Riksbank expects to raise the repo rate to 0.2 per cent during the second half of 2024.

This is slightly earlier than in the November assessment and the forecast increase is also 0.1 percentage points higher.

The Riksbank also believes that a further increase to 0.3 per cent will take place during the first quarter of 2025.

Some analysts had expected the Riksbank to tighten its reins after Sweden recorded the highest inflation since December in 1993, when consumer prices measured with a fixed interest rate (CPIF) rose 4.1 per cent from a year earlier.

“Excluding energy prices, however, inflation is close to 2 per cent. The Riksbank estimates that energy prices will not increase further this year and that CPIF inflation will therefore fall back,” the Riksbank said in a press release.

The Riksbank expects inflation to fall to just over one per cent at the end of 2022 and then increase to close to the 2% target from mid-2023.

The Riksbank also sees a scenario in which inflation, despite the recent rise, does not reach its target.

“After two years strongly marked by the pandemic, the inflation outlook has now partly changed. But even if the risk of too low inflation is judged to have decreased, it still remains.”

Following the Riksbank’s announcement, the Swedish krona weakened by around 0.5 per cent against the euro and the US dollar, the news agency TT reported.

Source: sn.dk

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