The news came as no surprise, as Sweden’s central bank had predicted in February that the rate would remain stable for the year.
On Wednesday, it predicted that the rate would slowly begin to rise throughout the second half of 2014.
“The Swedish economy is on the way to a recovery,” the Riksbank wrote in a statement, adding that inflation is expected to be low for a while longer.
“Economic developments in Sweden and abroad have been largely in line with the Riksbank’s most recent forecast in April. The repo rate needs to remain low to support the economy and enable inflation to rise to the target of two percent.”
“The weak demand in the euro area has led to a fall in exports and investment in Sweden. At the same time, households’ finances are relatively strong. Low interest rates and rising employment have contributed to good growth in incomes preparing the ground for continued steady growth in consumption,” it added.
The Riksbank predicted that with an improving global economy, demand for Swedish exports will increase, resulting in a growth in Gross Domestic Product at the end of the year. Next year, however, the bank predicted that the labour market and unemployment will fall again.
The Riskbank’s Deputy Governors Karolina Ekholm and Martin Flodén both entered reservations about maintaining the rate, each advocating a drop to 0.75 percent.
TT/The Local/og
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