Sweden hikes repo rate for 1st time in 2 years
By Malin Rising |
July 2, 2010, Friday
|
Print Edition
Print Edition
THE Swedish central bank yesterday raised its key interest rate by a quarter percentage point to 0.5 percent for the first time in two years, saying the economy is recovering strongly from last year's global downturn.
The central bank has kept the key repo rate unchanged at 0.25 percent since July 2009, after making several sharp cuts in the autumn and winter of 2008-2009. The last time it raised rates was in July 2008.
"Following the substantial fall in GDP, the Swedish economy is now recovering on a broad front and employment is increasing steadily, although unemployment is still high," the Riksbank said in a statement.
However, the weaker development of economies in the eurozone means the repo rate, its key lending rate, may not have to be raised as much in the long term as previously expected, it added.
It said it expects to raise the repo rate to 0.9 percent in the fourth quarter of 2010 and 2.1 percent by the third quarter 2011 to get inflation on target at 2 percent.
Nordea chief economist Annika Winsth said that the rate increase was in line with expectations and that most market rates had already been adjusted in anticipation of yesterday's decision.
The central bank has kept the key repo rate unchanged at 0.25 percent since July 2009, after making several sharp cuts in the autumn and winter of 2008-2009. The last time it raised rates was in July 2008.
"Following the substantial fall in GDP, the Swedish economy is now recovering on a broad front and employment is increasing steadily, although unemployment is still high," the Riksbank said in a statement.
However, the weaker development of economies in the eurozone means the repo rate, its key lending rate, may not have to be raised as much in the long term as previously expected, it added.
It said it expects to raise the repo rate to 0.9 percent in the fourth quarter of 2010 and 2.1 percent by the third quarter 2011 to get inflation on target at 2 percent.
Nordea chief economist Annika Winsth said that the rate increase was in line with expectations and that most market rates had already been adjusted in anticipation of yesterday's decision.
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