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Sweden's central bank extends bond-buying to boost inflation

Xinhua, October 29, 2015 Adjust font size:

The Swedish central bank expanded its bond-buying program and kept its negative repo interest rate unchanged on Wednesday in a bid to spur inflation.

The Riksbank left its key rate at -0.35 percent and said it would purchase a further 65 billion SEK (7.72 billion U.S. dollars) worth of government bonds to safeguard a robust upturn in inflation, it said in a statement.

"Economic activity in Sweden is strengthening and inflation is showing a clear upward trend," the bank wrote.

"But there is still considerable uncertainty regarding the strength of the global economy and central banks abroad are expected to pursue an expansionary monetary policy for a longer time," it added.

The Riksbank sent its repo rate into negative territory for the first time in February before cutting it further in March and July in order to nudge Swedish inflation closer to its 2-percent target.

The bank said its policies had "contributed to a stronger Swedish economy," lower unemployment and higher inflation.

Consumer prices will remain flat in Sweden this year, the bank said in its forecast, although underlying inflation is predicated at 0.9 percent.

The Riksbank does not expect to raise its interest rate above zero until 2018. (1 U.S. dollar = 8.42 SEK) Endit