MNI: Sweden Riksbank Leaves Key Repo Rate -0.25%: Text

--Next Hike Expected H2 2019: Riksbank

     LONDON (MNI) - Sweden's Riksbank left the key repo rate unchanged at -0.25%

Wednesday. The central bank again said the next hike was expected in the second

half of 2019.

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     The full text of the Riksbank announcement follows:

     Repo rate unchanged at -0.25 per cent 

     Economic developments in Sweden and abroad have entered a phase of lower

growth. Although growth is more subdued, economic activity is still strong. The

conditions for inflation to remain close to 2 per cent in the coming years have

not changed to any great extent. The Executive Board has therefore decided to

hold the repo rate unchanged at -0.25 per cent. As in December, the forecast for

the repo rate indicates that the next increase will be during the second half of

2019, provided that the economic outlook and inflation prospects are as

expected.

     Good economic activity despite mixed signals Growth abroad has slowed down,

but economic activity will continue to be good over the next few years, with low

unemployment and rising wage growth in many countries. There is still

substantial uncertainty about the strength of the international economy.

     Although indicators point to sentiment in the household and corporate

sectors having dampened in Sweden, the picture of strong economic activity

remains. Developments on the labour market have been slightly stronger than

expected and unemployment is at its lowest level in a decade. Both inflation and

inflation expectations have become established at around 2 per cent.

     Good conditions for inflation close to 2 per cent going forward The strong

economic activity and rising cost pressures both in Sweden and abroad mean that

the conditions are good for inflation to remain close to the target in the

coming years. This outlook has not changed to any great extent since December.

The Executive Board has therefore decided to hold the repo rate unchanged at

-0.25 per cent. Monetary policy thus continues to be expansionary and provide

support to economic activity.

     Reinvestments of principal payments and coupons in the government bond

portfolio will continue until further notice.

     Monetary policy needs to proceed cautiously Several factors indicate that

monetary policy needs to proceed with caution. As in December, the forecast for

the repo rate indicates that the next increase will be during the second half of

2019, on condition that the economic outlook and inflation prospects are as

expected. The Executive Board assesses that the repo rate needs to be raised at

a slow pace even after that, roughly twice a year by 0.25 percentage points on

each occasion, for inflation to remain close to 2 per cent. However, there is

uncertainty over developments abroad and the strength of domestic demand. It is

the economic outlook and inflation prospects that will determine future monetary

policy.

     In January 2016, the Executive Board adopted a mandate that facilitates

rapid intervention on the foreign exchange market. The mandate has been extended

several times since then, but the Executive Board chose not to extend it further

when it expired on 12 February.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com