MNI: Sweden Riksbank Leaves Key Repo Rate At -0.50% - Text

--Bond Purchases To Continue As Planned

--First Riksbank Hike Not Seen Until Mid-2018

     LONDON (MNI) - Sweden's Riksbank has decided to leave the key repo rate

unchanged at -0.5% at Monday's meeting, with bond buying plans left unchanged.

The central bank repeated that it doesn't expect raise rises until the middle of

2018.

     The full text of the Riksbank announcement follows:

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     Repo rate unchanged at -0.50 per cent

     Economic activity is strong and inflation is close to the target of 2 per

cent. Monetary policy needs to remain expansionary for inflation to continue to

be close to 2 per cent. The Executive Board of the Riksbank has therefore

decided to hold the repo rate unchanged at -0.50 per cent and is expecting, as

before, not to raise it until the middle of 2018. The purchases of government

bonds will continue during the second half of 2017, as decided by the Executive

Board in April. As the present asset purchase programme will run for the

remainder of the year, it will provide an opportunity to await further

information that could affect a decision in December to possibly extend the

purchases. The Executive Board has also taken a decision to extend the mandate

that facilitates a quick intervention on the foreign exchange market.

     Developments since September have been in line with the Riksbank's

forecasts both abroad and in Sweden. The international recovery is continuing,

but global inflationary pressures are subdued and the level of interest rates is

low. The normalisation of monetary policy abroad is expected to take time.

     The Riksbank's monetary policy has contributed to economic activity in

Sweden being strong. The employment rate is historically high. Inflation has

risen and was 2.3 per cent in September. Above all, prices for services have

increased rapidly, which reflects the way in which the strong economic activity

is having a greater impact on the rate of price increases.

     Economic activity needs to continue to have an impact on prices

     Part of the upturn in inflation in recent months is explained by temporary

factors, however. Inflation is expected to fall back slightly in the period

ahead but will remain close to 2 per cent in the coming years. It has taken time

and a great deal of support from monetary policy to bring up inflation and

inflation expectations. It is therefore important that the strong Swedish

economic activity continues to have an impact on price developments so that

inflation expectations remain anchored at the target. For inflation to remain

close to target, it is also important that the krona exchange rate does not

appreciate too quickly. This could happen if, for example, the Riksbank's

monetary policy deviates clearly from that of other countries.

     Expansionary monetary policy to keep inflation close to target

     Against this background, the Executive Board of the Riksbank has decided to

hold the repo rate unchanged at -0.50 per cent. The Executive Board is

expecting, as before, to let the repo rate remain at this level until mid-2018,

after which slow increases will be initiated. Purchases of government bonds will

continue in 2017, as decided in April. As the asset purchase programme will run

for the remainder of the year, it will provide an opportunity to await further

information that could affect a decision in December to possibly extend the

purchases. The Executive Board has also taken a decision to extend the mandate

that facilitates a quick intervention on the foreign exchange market.

     Just as before, the Riksbank is prepared to implement further monetary

policy easing if necessary to stabilise inflation and safeguard the inflation

target. All of the tools that the Riksbank has described earlier can be used if

necessary.

     Monetary policy safeguards the inflation target's role as nominal anchor

for price and wage formation and thereby contributes to the positive development

of the economy. But the low interest rates contribute at the same time to

increasing the risks linked to high and rising household indebtedness. To

achieve long-term sustainable development in the Swedish economy, these risks

need to be managed via measures within housing policy, taxation policy and

macroprudential policy.

     Forecast for Swedish inflation, GDP, unemployment and the repo rate Annual

percentage change, annual average

     Deputy Governors Martin Floden and Henry Ohlsson entered reservations

against the decision to extend the mandate for foreign exchange interventions.

Mr Floden cited the same motivation as he did at the meetings in January,

February and July 2016, and in February 2017. Mr Ohlsson considered that, in a

situation with inflation and inflation expectations close to the target level,

potential interventions on the foreign exchange market could be managed without

a special mandate.

     The decision on the repo rate will apply with effect from 1 November. The

minutes from the Executive Board's monetary policy meeting will be published on

9 November

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