Stockholm-Sweden’s central bank has not changed its key policies on Tuesday, benchmark repo rates will remain zero for the next few years, and despite the rapid recovery from the pandemic, there are few signs of rushing monetary tightening. not.
Sweden’s gross domestic product has returned to pre-pandemic scale, inflation is expected to exceed the 2% target, and growth is expected to remain strong amid the end of public regulation.
However, fiscal and monetary policy is still very loose and Riksbank is hesitant to change course.
“… It is important to continue expanding monetary policy so that inflation remains at the target of 2%,” Stephen Ingbeth told reporters.
He said he had tweaked policies, said that lending facilities launched during the pandemic would be closed immediately and that pre-pandemic collateral requirements would be restored at the end of the year.
The central bank said it expects to close asset purchases at the end of this year and expect little change in its balance sheet during 2022, following previous guidance.
Analysts in a Reuters poll predicted that balance sheet interest rate policies and plans would remain unchanged.
“The Swedish National Bank believes that overstimulating is less risky than reducing it early,” said Torbjorn Isaksson, an economist at Nordia.
Affected by the decline of the pandemic and the recovery of inflation, central banks around the world are facing tough decisions about when to withdraw their economies from emergency assistance.
Sweden’s inflation reached 2.4% in August and could exceed 3% in the coming months before it eases again next year.
The Sveriges Riks can tighten policies if inflation risks significantly and sustainably overshooting targets, but undershoots will be difficult to deal with, Inveth said.
“In that case, we’re talking about negative interest rates, and many people are uncomfortable with it,” Ingbeth said.
Norway is likely to be the first G10 group in the developed world to trigger a rate hike, and the market expects a series of rate hikes to begin on September 23.
The Federal Reserve Board may begin cutting bond purchases later this year.