The Riksbank cut rates – Swedish newspaper Svenska Dagbladet

Now, lowered the repo rate to 0.25 percent. Additional measures were necessary, according to 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. In order to support the rise in inflation has The Executive Board decided to make monetary policy more expansionary by reducing the repo rate by 0.15 percentage points to 0.25 percent and buy government bonds for 30 billion, “writes Riksbankeni a press release.

The decision to lower the interest rate is based including uncertainty about the outside world economy and the effects of the slump in oil. Concern remains high and recent weeks have seen large movements in interest and currency markets, the Riksbank notes.

The Riksbank also buys government bonds for 30 billion. Here’s their whole reason for the decision.

Today’s rate decision was extraordinary. Normally, the Riksbank decides the interest rate at the regular Board meetings.

– It is an unusual step to changing interest rates between the scheduled meetings. They have nevertheless not done it since Lehman Brothers, says Magnus Alvesson, economist at Swedbank.

Exchange reacted positively to the news. Since the announcement, it has risen by about 0.6 percent.

Another was the situation on the currency market. The crown drops sharply against both the dollar and the euro after the Riksbank’s decision to reduce the negative interest rates further. A dollar now costs 8.82 SEK, 14 cents more than just before the Riksbank’s vengeance. The euro is at 9.34 crowns.

It was in the fall Riksbank made the historic reduction to zero interest rates. Then, in February this year, came another historic statement: minus rate of -0.1 percent. The development continues now.

– Again, it is a historic decision by the Riksbank. We are moving into unknown territory. It is, I am afraid of is that it takes too much right now to bring inflation when it might now controlled by forces outside the Riksbank’s control, says Robert Bergqvist, chief economist at SEB.

He notes that the market was unprepared and that the Riksbank actively using the element of surprise as a way to influence.

Bergqvist doubt that räntesäkningarna of the key repo rate may continue more than this.

– This will lead to system problems. Although the tax and accounting purposes, it will be difficult, he says, noting that the development is a difficult challenge for the banking sector.

Par Magnusson, chief economist at Royal Bank of Scotland is one of those who predicted the Riksbank cut today.

– If they have said they will do everything necessary so Riksbank must also deliver it, he says and believes that otherwise their credibility is disturbed, he said.

The Riksbank thus painted himself into a corner.

What do you think of the level?

– Not surprised but reasonable. Although the Riksbank increases further 30 billion in bond purchases is a conceivable level.

Pär Magnusson believes that the Riksbank has the opportunity to do more.

– The smallest sign that inflation does not move up to the expected level, they must strike

The purchase of additional government bonds – for 30 billion – looks Bergqvist as less startling as it is in line with SEB’s expectation of a total of 50 milljarder in government bond purchases.

He notes that the market was unprepared and that the Riksbank actively using the element of surprise as a way to influence.

A press conference about the new interest rate announcement will be held at 15:00.