Riksbanken raises REPO rate again

Swedish central bank Sveriges Riksbanken raised REPO rate by another 0.25 percentage points to 2.0 per cent. The central bank says that the Swedish economy is growing at a good rate and that CPI inflation is high due to rising mortgage rates. While underlying inflation expectations are low, the bank expects them to rise as economic activity picks up. The move is a part of gradual policy to keep inflation near the target of 2.0%.

Riksbanken acknowledges that global uncertainty has increased but feels that Swedish economy is continuing to grow at a good pace. Riksbanken feels that rapid growth will continue in Latin America and Asia. Two Deputies voted against the move, preferring instead to keep rates lower for an extended period followed by rapid increases in 2012-2013 as per repo rate path forecast.