Swedish central bank left the main interest rate unchanged at 4.00% during the meeting of the Executive Board on 18 December.
The economy growth slowdown didn’t allow the Riksbank to increase the interest rate according to their uptrend policy maintained since January 25, 2006. The Board has noted that the economic activity in Sweden is at a good level, but it might be slowing as it failed to meet the bank’s forecasts. Global financial markets crisis and weaker development in the whole world also pressure on the Swedish economy.
While there are definite obstacles for the economy growth, the price growth risks are still untamed and, in fact, are largely increased by the global rising demand commodities and oil. As the consumer prices inflation reached 3.3% (1.2 points above the 2.1% forecast target), any monetary policy changes should be made with a great care.
Nevertheless Riksbank assured the market participants that the general interest rate path is going to be unchanged – by end of the first half of 2008, interest rate will be most likely increased to 4.25%. But interest rate path policy is “not a promise”, as the central bank stated, so they will be looking at the economic indicators closely before making any changes.
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