Swedish central bank leaves negative interest rate unchanged

Sweden's central bank on Tuesday left its key interest rate unchanged and said it did not plan to raise it again until 2017.

The Riksbank kept the rate at minus 0.35 percent after sending into negative territory for the first time ever earlier this year in a bid to bring inflation closer to its target of 2 percent.

"There has been an upward trend in inflation since last year, but it is not yet on a firm footing," the bank's statement read.

"To safeguard the resilience of the upturn in inflation, monetary policy needs to remain very expansionary," it continued.

The bank said it expects underlying inflation in Sweden of 0.9 percent for 2015 and said the interest rate would not turn positive until 2018.

Some economists have hit out at the bank's monetary policy as they believe lower interest rates will encourage lending by Swedish households, whose gross debt-to-income ratio is among the highest in the European Union, according to Eurostat figures.

"They are worried about household debt, but also say that their primary and foremost target is inflation," Roger Josefsson, the chief economist at Danske Bank, told daily newspaper Dagens Nyheter.

The Riksbank's bond-buying program is set to continue at the current pace, the bank said, which would bring total purchases to 200 billion SEK (23.5 billion U.S. dollars) at the end of June next year. (1 U.S. dollar=8.50 SEK) Endit