Sweden's Central Bank Cuts Repo Rate To Negative 0.50%

By Karen FriarMarketWatch Pulse

Sweden's central bank pushed a key interest rate deeper into negative territory on Thursday, citing concerns about inflation. The Riksbank cut the repo rate to negative 0.50% from negative 0.35%. "The economy continues to strengthen but inflation is expected to be lower during 2016 than previously forecast. The period of low inflation will therefore be longer. ... To provide support for inflation so that it rises and stabilizes around 2% in 2017, the Executive Board of the Riksbank has therefore decided to cut the repo rate by 0.15 percentage points," the central bank said in a statement. The move comes a year after the Riksbank cut its main interest rate below zero percent for the first time ever. In its monetary policy statement Thursday, the Swedish central bank said that its buying of government bonds will continue for the first six months of 2016, in line with the plan it adopted in October, and that it has decided to reinvest maturities and coupons from its government bond portfolio until further notice. The Swedish krona tumbled against the dollar after the decision, with the greenback buying 8.4541 krona.

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