Riksbank Leaves Rate Path Unchanged But Upgrades Asset Purchases
By Dominic Chopping
STOCKHOLM--Sweden's central bank on Thursday backed earlier
guidance that its key repo rate will remain unchanged at zero at
least until late 2023, but said it will expand its asset-purchase
program to boost conditions for an economic recovery and help
inflation rise towards target.
The Riksbank said the second wave of coronavirus infections has
promted tougher restrictions, hurting the already hard-hit services
sector and prompting growth forecasts to be revised down in Sweden
and abroad. Inflation prospects are also assessed as a little
weaker over the coming years, it added.
To provide support to economic developments and help inflation
rise toward its 2% target, the Riksbank said it will increase asset
purchases by 200 billion Swedish kronor ($23.54 billion) to SEK700
billion, and extend the program to run until Dec. 31, 2021.
"By expanding and extending the asset purchase program, the
Riksbank is making it clear that comprehensive monetary policy
support will be available as long as it is needed," the Riksbank
However, the bank said it still doesn't expect CPIF inflation to
lastingly attain 2% until 2023.
"The Riksbank's measures contribute to low interest rates and to
the financial markets functioning smoothly and not causing further
uncertainty in the already strained situation," it added.
The central bank reiterated that it could still lower the repo
rate further if it deemed this an effective measure, particularly
if confidence in the inflation target were to be threatened.
Write to Dominic Chopping at firstname.lastname@example.org
(END) Dow Jones Newswires
November 26, 2020 04:26 ET (09:26 GMT)
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