YEREVAN, July 2. / ARKA /. In a surprise move, Sweden’s central bank on Thursday cut its main interest and increased its bond buying program as it stepped up its battle to raise inflation amid rising economic uncertainty triggered by the Greek crisis, vestifinance reports citing The Wall Street Journal (WSJ).
The central bank, known as the Riksbank, lowered its main repurchase rate to minus 0.35% from minus 0.25% where it had been since March. The bank said it would increase its purchases of government bonds by 45 billion Swedish kronor ($5.37 billion).
The Swedish krona weakened sharply against the euro, which rose to 9.35 kronor from 9.24 kronor.
“Inflation is rising and economic activity in Sweden is continuing to strengthen but uncertainty abroad has increased,” the Riksbank said. “Events in Greece over the past few days have substantially increased the uncertainty,” it added.
It also cited concerns over a stronger Swedish currency, which had risen beyond Riksbank forecasts and risks choking off imported inflation.
The Riksbank board said it was ready to do more if needed and said it could change policy in between scheduled meetings as it did in March. It said it has “a high level of preparedness” and could lower rates further, increase bond buys or intervene in foreign-exchange markets. Analysts said the statement suggests even lower interest rates are likely. -0-
