Bloomberg News

Swedish Riksbank to Keep Rate at 2% in Next Year, Survey Shows

October 12, 2011

Oct. 12 (Bloomberg) -- Sweden’s central bank will keep its benchmark interest rate unchanged at 2 percent in the next 12 months and raise it to 2.3 percent in two years, according to a survey of money market participants commissioned by the bank.

Consumer prices will rise 1.9 percent in the next 12 months and 2.1 percent the following year, according to the survey published today by TNS Sifo Prospera on its website. The Swedish economy will grow 2 percent in the next 12 months and 2.2 percent the following year, the survey showed.

The Stockholm-based Riksbank kept its benchmark lending rate unchanged at 2 percent last month and scaled back tightening plans as weakening growth prospects abroad hurt Swedish output, of which half is sold abroad.

“This autumn we’ll see the Riksbank revise downward and flatten their repo path,” Anders Brunstedt, an analyst at Svenska Handelsbanken AB, said in a note yesterday after inflation last month slowed more than analysts estimated. Price increases will slow and the rate will fall to 2 percent by the end of the year, he said.

The central bank, which targets a 2 percent inflation rate, sees consumer prices rising 3 percent this year before slowing to 2.1 percent in 2012.

--Editors: Jonas Bergman, Kati Pohjanpalo

To contact the reporter on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net.

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net.


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