MNI INTERVIEW2: Riksbank Focus Liquidity, Not Rates-Ohlsson

The Riksbank remains focused on providing ample liquidity and ensuring a fully functioning financial system rather than lowering the benchmark interest rate, Deputy Governor Henry Ohlsson told MNI.

"The main focus is to get ... out liquidity in the economy so that the market functions well," Ohlsson said.

"Our contribution to the policy efforts to mitigate the economic crisis is to see … that the financial system is in order," he added.

The Riskbank unveiled a program of asset purchases in the early stages of the Covid pandemic, then extended the overall envelope to SEK500 billion taking it through to June next year, while leaving the policy rate at zero.

With headline inflation running well below target the expansionary policy chimes with the central bank's price mandate.

"We have been below the (inflation) target but getting liquidity out and doing these other things, that is an expansionary monetary policy," Ohlsson said, standing full-square behind Governor Stefan Ingves's approach to handling the pandemic fallout by reassuring investors of the central bank's presence in markets.

"We have also a policy effect of doing this and we expect that we move towards the target. And we do these things rather than change the repo rate," he said.