Swedish Interest Rates Hold Firm

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.

The US Energy Information Administration (EIA) said on Wednesday that US crude stocks unexpectedly jumped last week, although gasoline and distillate inventories were lower. Crude inventories increased by 2.256 million barrels despite predictions of a decrease of -2.563 million barrels. The EIA stated that the advance happened even though crude stocks at the key US oil storage hub in Cushing, Oklahoma actually fell by 245,000 barrels – the second drop in stocks in the last eight weeks. US crude futures fell 0.50% or 24 cents to $53.05 a barrel. Brent crude dropped to 0.60% and lost 33 cents to settle at $55.02 a barrel. EIA data indicated that refinery crude runs rose by 184,000 barrels per day with refinery utilization rates rising 1.00%. Meanwhile, US crude imports increased last week by 1.039 million barrels per day. After finding support following Wednesday’s dip, crude futures are trending flat on the session.