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Sweden Central Bank Keeps Monetary Policy Unchanged

Sweden's central bank retained its key interest rate and asset purchase programme, as widely expected, on Thursday.

The Executive Board of Riksbank decided to hold the repo rate at zero percent and it is expected to remain at this level in the years to come.

The board also voted to continue asset purchases within the envelope of SEK 700 billion and to offer liquidity within all the programmes launched.

The bank reiterated that it will design monetary policy so that there is extensive monetary policy assistance for as long as necessary in order to support the recovery and inflation.

The bank observed that inflationary pressures are still deemed moderate and it is expected to take until next year before inflation rises more persistently.

Inflation outlook was revised up for the entire forecast period. Consumer prices are forecast to climb 1.6 percent this year instead of 1.4 percent estimated in April. The projections for 2022 and 2023 were revised up to 1.7 percent and 1.8 percent, respectively.

The economic recovery is proceeding slightly faster than expected and the Riksbank's forecasts have been revised up somewhat, the bank said. According to the latest forecast, the economy will expand 4.2 percent in 2021, up from the prior forecast of 3.7 percent.

The outlook for 2022 was raised to 3.7 percent from 3.6 percent and that for 2023 was lifted to 1.9 percent from 2 percent.

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