Political Economy



Swedish central bank, the Kiksbank leaves Repo rate unchanged at 1 per cent

Thursday, 24 October 2013
The Swedish central bank or the Riksbank announced that it has decided to hold the repo rate unchanged at 1 per cent.

According to a press release the bank said following the slowdown in recent years, the outlook for the Swedish economy is brightening. There has been some improvement in the labour market and this is expected to become clearer during 2014. At the same time, inflation is low.

For that reason, the Executive Board of the Riksbank has decided to hold the repo rate unchanged at 1 per cent, to enable inflation to rise towards 2 per cent and to support the economic upturn. The repo rate needs to remain at this low level until economic activity is stronger and inflation rises. As before, the repo rate is not expected to be raised until the end of 2014.Sweden central bank

The bank posit that there is good prospects of an upturn in the Swedish economy. It said that economic developments in Sweden and abroad have been largely in line with the Riksbank's forecasts for some time now. There are signs of an improvement in the euro area and the recovery in the United States is continuing. However, major challenges still remain. The political disagreement in the United States over fiscal policy is one source of uncertainty, as are the effects of the Federal Reserve's tapering of its asset purchases. Despite a slightly more subdued development in several emerging markets, the world as a whole is expected to grow at a relatively good rate during the coming years. 

The recovery abroad will contribute to brighter prospects for the Swedish economy. Sentiment among households and companies has gradually risen, at the same time as there has been some improvement in the labour market. Low interest rates and an expansionary fiscal policy create the conditions for stronger consumption among households in the coming period. Growth in Sweden is thus expected to be gradually higher, which means that employment will rise at a faster pace and unemployment will fall.
News source is based on press release from Riksbanken and more details could be obtained here
By Scancomark.com Team

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