Sweden's central bank keeps interest rate at historic low

Sweden's central bank, the Riksbank, left the repo rate unchanged at minus 0.50 per cent on Wednesday, it said on Wednesday.

While inflation continues to rise in Sweden and the national economy is doing well, there is still great uncertainty around the world, Xinhua news agency quoted a statement as saying.

The bank singled out the June 23 British referendum on its European Union membership as a major cause of uncertainty in the global economic policy arena.

However, it asserted conditions in Sweden point to a continued rise in inflation and a drop in unemployment rates.

"Supported by the expansionary monetary policy, the Swedish economy has strengthened rapidly and activity is expected to continue to be strong over the next few years. Inflation has shown a rising trend since 2014 and is now just below 1.5 per cent," the bank said.

The central bank also pointed to a potential slight rise in Sweden's repo rate in the second half of 2017, when inflation is expected to be at two per cent.

"But the low interest rate levels also entail risks, such as increased household indebtedness. To achieve long-term sustainable development in the Swedish economy, these risks need to be managed via targeted measures within macro-prudential policy, housing policy and fiscal policy," the bank said.

--IANS

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