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Swedish central bank signals rate hike in December


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Swedish central bank signals rate hike in December

The Swedish central bank maintained its repo rate at negative 0.25% but said it "will most probably" raise the rate to zero percent in December despite a slowing economy.

In its latest monetary policy decision, the Sveriges Riksbank also said that after an expected increase in December, the repo rate will be unchanged for a "prolonged period" due to "considerable" uncertainty over economic activity and inflation.

Riksbank said inflation has fallen back in recent months as expected, while economic activity is slowing down slightly faster than anticipated.

However, the slowdown suggests that economic conditions are becoming "more normal" after several years of high growth, the central bank said.

Sweden's weakening economy and low inflation will mean that there will be pressure on the Riksbank to cut rates next year, according to a note from Torbjörn Isaksson, chief analyst at Nordea Markets. "But a rate cut is nevertheless unlikely as the bank seems increasingly reluctant to have rates in negative territory," he wrote.