Riksbanken, Sweden's Central Bank announced yesterday that it will leave its main steering rate, the repo rate, unchanged at 1.50 per cent.
While most of Europe discuss a lower interest rate in order to help the sluggish economy, most experts in Sweden have rather discussed a higher interest rate. The Riksbank prognosis during the spring was indeed based on this judgement. To lower the interest rate is not likely due to the relatively high private housing debt in Sweden.
However, there was a slight change in the Riksbank prognosis. The current estimate is that the Swedish repo rate will have to stay on this low level at least one more year. Thereafter it is expected to be raised gradually.
The inflation in Sweden is very low now, around 1.00 per cent. But also the unpredictable economic future in the export-dependent Swedish economy lead to the decision to keep the interest rate at a low level.