The Swedish regulator will make the most important decision in the last 7 years - ConsultFX

The Swedish regulator will make the most important decision in the last 7 years


According to Bloomberg, this week a number of leading economists expect the Central Bank of Sweden to raise interest rates. Note that the regulator has not resorted to such a measure for the past seven years.

Experts do not exclude that the upcoming meeting of the Board of the Central Bank of Sweden will be the most difficult since 2011. Seven years ago, the regulator last raised interest rates. Since then, the financial incentive program has not changed.

At the moment, 10 out of 24 economists surveyed by Bloomberg expect the change regulator, considering that a quarter point should be added to the base repo rate and raised to -0.25%. The rest of the analysts are confident in maintaining the old strategy of the Central Bank of Sweden.

The interest rate hike in Sweden may take place a week after the announcement by the management of the European Central Bank (ECB) to end its quantitative easing program (QE) lasting four years. It was this measure that forced Stefan Ingves, head of Riksbank, to launch his own bond purchase program and reduce rates below zero. In 2017, after the curtailment of the quantitative easing program, the board of directors of the Riksbank split into two camps - supporters and opponents of QE. However, due to inflationary fluctuations at the level of 2%, the board of the bank admits the possibility of raising the rate in December of this year or in February 2019.

Many analysts believe that now is not the right time to tighten monetary policy. The reasons for this experts believe the slowdown in global and domestic economic growth against the background of the escalating trade war between the United States and China, as well as the collapse of stock markets. In this situation, an increase in rates may cause difficulties. Swedish politicians need to take into account all the "pitfalls", experts summarize.

The material has been provided by InstaForex Company -