Sweden’s Riksbank Holds Rate Steady and Signals Easing Is Over

(Bloomberg) -- Sweden’s central bank kept its benchmark rate unchanged at a two-year low and reiterated it’s finished with the easing cycle.

The Riksbank’s decision to hold its key rate at 2.25%, announced on Thursday, was predicted by all but one economist surveyed by Bloomberg. 

The board “assesses that the rate will remain at this level going forward,” officials said in a statement. “The Riksbank monitors developments closely and will act if the outlook for inflation and economic activity so requires.”

A food-driven surprise in inflation data since the start of the year is making it harder for Swedish officials to lower rates further on top of the 175 basis points of easing since last May, with US President Donald Trump’s expanding tariff war amplifying the uncertainty. 

While Governor Erik Thedeen and his colleagues have sought to push largest Nordic economy from its three-year bout of near-stagnation, their efforts — some of the most dovish policies among the developed nations — have so far failed to bring about a decisive turnaround.

A day before the Swedish announcement, though after the policy-setting meeting in Stockholm on Wednesday, the Federal Reserve held rates steady at the conclusion of its own two-day gathering. Chair Jerome Powell acknowledged the high degree of uncertainty from Trump’s significant policy changes, but said officials can wait for greater clarity on the impact of those policies on the economy before acting.

“The upturn in inflation at the beginning of the year is assessed as temporary,” policymakers said. “However, the executive board is vigilant regarding contagion effects that could lead to inflation not falling back as expected.”

--With assistance from Joel Rinneby, Naomi Tajitsu and Thomas Hall.

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