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Swedish central bank governor, Ingves lowers interest rates

Tuesday, 20 December 2011
The Swedish central bank, the Riksbank, and its governor, Stefan Ingves, lowers the country’s interest rate by 0.25 percentage points to 1.75 percent.

At the Riksbank's most recent meeting, the Board decided to lower the repo rate to 1.75 percent. At the same time, the bank lowers the forecast for the future policy rate thereby distorting the previously designed trajectory.

 The governor and his team believes now that the policy rate in the fourth quarter of next year will be around 1.7 percent, that is basically a flat rate in time. Previously, the forecast pointed to a rate of 2.3 percent in the fourth quarter of 2012.


A year later, in the fourth quarter of 2013, the Riksbank would raise the repo rate to 2.4 percent, compared with the previous forecast of 2.9 percent.

The Riksbank also adjusts its forecast for the Swedish GDP growth for the coming years. Next year, the governor feels that the GDP will be growing by 1.3 percent, compared with the earlier estimate of 1.5 percent. 2013 growth is forecast to be 2.3 percent, a slight adjustment from the earlier estimate of 2.4 percent.

Inflation, or the consumer price index (CPI)  forecast has now moved to be around 1.5 percent next year, compared with the previous prediction of 1.9 percent. In 2013 inflation is expected to land on the target of 2.0 percent before rising to 2.7 percent 2014

According to survey of 15 analysts conducted by Swedish media body, SME Direkt nine percent of those dealing with funds that were questioned had expected a rate reduction  of 0.25 percentage point to 1.75 percent, while some six percent were assuming that the policy rate would remain unchanged.
By Team

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