The Riksbank cut its repo rate by 0.15 percentage points to 0.25 percent, according to a press release.
was during a Board meeting at the Riksbank that the members today decided to lower the already record-low repo rate further. In addition, extended support purchases of government bonds. The Riksbank should buy Swedish government securities for an additional 30 billion.
Although it has been speculated that the Riksbank could be cut rates, several economists were surprised today’s announcement.
– I was surprised that there was a reduction in the day. But it is not surprising that they want to try to get up inflation, says Mats Dillén, Director General of NIER.
After his latest monetary policy meeting the Riksbank signaled that it could come further action before the next meeting. The justification for the Riksbank now lower rate to -0.25 percent is to krona. In its press release of the Riksbank “There are signs that inflation has bottomed out and is on the way up, but the recent strengthening of the crown in danger of breaking that trend.”
Anna Austria, chief economist at Länsförsäkringar, is critical the Riksbank’s actions.
– It is quite unusual to align themselves so explicitly on the exchange rate. It is a volatile variable and not as easy to control. On the whole it is in the right direction, but that so explicitly hangs up on the krona is a bit problematic. We are facing a situation where the European Central Bank will stimulate the economy very much with its purchase program and it becomes the problem for us to keep up with it. So it is no wonder that it will strengthen considering it, says Anna East.
Today’s announcement is historic. It is very rare that the Riksbank acts between the monetary policy meetings and it is difficult to determine what it may be the effect, according to observers.
– We’re in pretty unfamiliar terrain. We do not know how much you can cut the repo rate. Now we should soon approaching the limit for how low a repo can be, says Mats Dillén.
Was it a good decision by the Riksbank?
– Yes I think it was a good decision. But we are out in the unfamiliar terrain so there is reason to read what the effects of the decision, says Mats Dillén, Director General of NIER.
The repo rate minus 0.25 per cent means that banks have to pay if they To deposit money with the Riksbank. One of the four major banks, Swedbank, says to echo that their customers will continue to have zero interest on their savings accounts.
– We have the current situation no plans to introduce less interest paid on savings accounts, says Claes Warren, Press Secretary at Swedbank.
How do you do when it comes to mortgage rates, they will be reduced further?
– The interest rate reduction effective from Tuesday and we do what we always do, We do not just watch the repo rate but on how the market is changing. We’ll have to wait and see, says Claes Warren.
The bank SEB says it’s too early to give any notice of the interest on savings accounts.
– When it comes to private savings, we want to far as possible to keep us around zero. Now we’re getting an issue where we get to watch volumes. If you have 50 million in an account it will be expensive for us, you are a normal saver it is a completely different thing. We know more about the situation in the coming days, says Laurence Westerlund, Press Officer at SEB.
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