In-line with its October estimate, the Riksbank projected inflation in Sweden to be a modest 1.40% next year, well short of the inflation target at 2.00%. The repo rate is the interest rate that commercial banks get when they deposit money for seven days at the Riksbank. Sweden’s repo rate was cut to its current -0.50% last February. A negative rate signifies that banks have to pay for keeping deposits with the central bank. As part of its expansionary monetary policy the Riksbank plans to buy government bonds and extend its quantitative easing during the first half of 2017 for SEK 30 billion or $3.2 billion dollars. A strong Krona could threaten the inflation target so the Central Bank’s move intends to prevent Krona from strengthening. After tumbling on Wednesday, USDSEK has found support, trending flat on the session.
Swedish Interest Rates Hold Firm
Daily Analysis - 22/12/2016