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Sweden’s Drops Key Lending Rate to -0.5%
Sweden’s central will lower its key lending rate on Feb. 17 to a minus 0.5% in preparation for what it now predicts will be an extended period of very low inflation.
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Sweden’s central will lower its key lending rate on Feb. 17 to a minus 0.5% in preparation for what it now predicts will be an extended period of very low inflation.
The Riksbank rate dropped into negative territory 12 months ago and has been slowly declining since then. Bank Governor Stefan Ingves says the latest reduction is appropriate because “the world looks different to what it did in December,” the Associated Press reports.
Ingves says the central bank no longer expects Sweden’s inflation rate—which finished last year at a microscopic 0.15%— to make significant headway in reaching the 2% target considered healthy until sometime after 2017.
In the meantime, Riksbank says it will continue its purchase of government bonds through June. AP notes that Ingves has not ruled out further rate cuts.
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