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Sweden’s Riksbank said it has decided to hold its key rate at a super-low minus 0.35 percent, as developments in the economy had been “somewhat stronger than expected”.
It was a cheerful note that kicked the krona higher.
The Riksbank also highlighted that a growing number of immigrants will support economic activity.
“The sharp increase in the number of asylum seekers coming to Sweden is expected to lead to an increase in public expenditure, which will contribute to higher GDP growth and lower unemployment in the coming years”, it said.
Sweden has long been Europe's top destination for asylum seekers per capita, with a record 190,000 applications expected this year.
However, growing segregation is emerging as a major concern in the country. About half of all refugees in Sweden are unemployed after seven years and only 60 percent find work after 15 years, according to Statistics Sweden.
“In the euro area, economic activity is strengthening, but the events in Greece over the past few days have substantially increased the uncertainty".
ECONOMY: Sweden's new bond-buying plan to stave off falling prices could trigger a round of money printing by its fellow non-eurozone neighbours to thwart untimely currency rises against the weakening euro, analysts told the AFP newswire.
The Scandinavian country has joined a growing group of countries to cut its key interest rate to negative — a historical first for the Nordic nation that shows how authorities globally are resorting to new methods to nudge up inflation and growth. Central banks across Europe are fighting to stop their economies from slipping into damaging deflationary cycles that could be difficult to reverse.
“What we've seen since the end of 2014 and the start of this year is a type of chicken race between central banks. Several of them have chosen to lower interest rates and expand their balance sheets,” bank SEB's chief economist Robert Bergquist told AFP.
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