Mr Ingves interest rate decision – Private Businesses

As anticipation retains Riksbank historically low interest rates.

To write the bank in a statement:

“The Swedish economy continues to strengthen, but uncertainty about economic developments abroad is large and has increased as a result of the outcome of the British referendum on the EU. in order to support the Swedish economy and rising inflation needed a very expansionary monetary policy. the Executive Board has therefore decided to leave the repo rate unchanged at 0.5 percent and judges that it will take longer before the rate starts to rise. “

the National Bank changed the last repo rate at the monetary policy meeting held February 10, 2016, when it was lowered by 0.15 percentage points to -0.50 percent.

at a press briefing on Wednesday said Governor Stefan Ingves that monetary policy in Sweden continues to need to be expansive, and the Riksbank now believe that it will take a little longer before they start raising the repo rate.

difficult to assess the impact of the British vote, it leads to political uncertainty which is difficult to handle for the forecasts.

So far, it means a considerably lower growth in the British economy but for Sweden it is expected to be relatively limited impact on GDP growth, although there are downside risks. It’s forecasts, however, probably need to be adjusted later. There are also ongoing discussions about the European banking system, and it also increases the uncertainty.

The Riksbank’s view is that the image they had in April largely agree. The global recovery is continuing, albeit at a somewhat slower pace. The UK economy is slowing, but it takes a while before the effects become clear. It is also reasonable to continue to wait very expansionary monetary policy by the ECB, Federal Reserve and Bank of Japan.

The downward revision for Sweden’s growth by 0.5 percentage points next year, due partly to the British results, partly because the image of Swedish growth is not quite the same as they were in April.

the price increases have been broad in Sweden and is expected to continue. We have had a period of weakening of the krona and then increasing import prices. The inflation forecast, while little has been revised down due to lower rent increases and a little weaker economy.

The exchange rate continue to play an important role, and the krona has weakened somewhat during the past few weeks “mess”, while we see a little weaker economic growth ahead.

– these factors will largely cancel each other out, he said.

the key going forward is continued krona not to appreciate too quickly or too much, but strengthened roughly in line with the Riksbank’s forecast.

He also reiterated that the Riksbank continues to have a high readiness to do more, and listed a number of options. They can also continue to act between meetings.

Regarding inflation expectations, he said that “quite clearly is going up.” These include the important expectations five years ahead.

– It is encouraging as it shows that monetary policy has an effect on the Swedish economy, he said.

At the same time, the low interest rate risks in the economy, as financial players can “render themselves”. Another long-term risk is that household debt will continue to rise.

The National Bank could raise interest rates sharply to curb this, but it would lead to the strengthening of the krona that would be harmful to the economy. This requires action in other fields, it requires an appropriate “policy mix” with the conduct of macro-prudential supervision.