STOCKHOLM - Sweden's central bank, the Riksbank, has decided to maintain its policy rate at 4.00%, citing easing inflationary pressures, while also indicating a readiness for future increases should inflation persist. This decision aligns with the expectations of several analysts who had anticipated the hold based on the bank's revised policy trajectory from September.
The Riksbank's latest statement suggests a continued contractionary monetary stance over the long term, with potential rate hikes on the horizon. The central bank also hinted at accelerating government bond sales. Despite the stable rate, there was a minor depreciation in the Swedish krona and a marginal increase in the EURSEK pair by 0.25%. These market reactions reflect the bank's comments on the krona's undervalued status and commitment to gradual and predictable financial policies.
Analysts were divided ahead of the announcement, with ten predicting a rate hike and nine expecting a hold. The split opinion was influenced by economic outlooks and rate forecasts which suggest that interest rates could either remain steady or increase through the next year. The Riksbank has adjusted its forecast for maintaining a peak rate, now expected to be around 4.10% until the fourth quarter of 2024, revised from an earlier expectation stretching into the first quarter of 2025.
Investors and market participants are now looking ahead to February 1, 2024, when another pivotal rate decision by Sweden's central bank is scheduled. The outcome of this future meeting will likely depend on how inflationary trends evolve in the coming months.
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