Sweden holds interest rate at record low
STOCKHOLM (AFP) - Sweden's central bank held its key interest rate at a record low of 0.25 percent, while also raising its economic growth forecast for the coming years.
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"To contribute to a stable recovery and attain the inflation target of two per cent, the Executive Board of the Riksbank (central bank) has decided to hold the repo rate unchanged at 0.25 per cent," it said.
"The repo rate is expected to remain at this low level until autumn 2010," it added, referring to the key "repurchase" rate of interest on loans made by the central bank to commercial lenders.
The rate "needs to be low over a long period of time to come to enable a stable development on the economy" and keep prices in check, it said, as it cautiously tries to incite a recovery of economic activity.
The bank raised its forecast for growth in Sweden's gross domestic product to 2.5 percent in 2010, with further increases in 2011 and 2012.
"The recovery has begun, but it will take time," it said.
Sweden's centre-right government last month unveiled budget plans focused on job creation and economic stimulus to lift Sweden out of its economic slump a year ahead of general elections.
It forecast that unemployment would rise to 8.8 percent this year and more than 11 percent in 2010.
The bank on Thursday gave an uncertain economic outlook.
"It is possible that the international recovery will be quicker than is expected... as a result of the improved situation in the financial markets," it said.
"However, it is also possible that the recovery could slow down when the fiscal policy stimulation packages around the world are gradually phased out."
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Last Updated (Thursday, 22 October 2009 10:40)
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