Swedish Riksbank expands bond-buying programme

Sweden’s central bank kept its main policy rate on hold at 0.35% as widely expected on Wednesday, but extended its government bond purchasing programme as it looks to do more to get inflation up to its 2% target.

The Riksbank has decided to extend its bond-buying by an additional SEK65bn so that purchases will amount to SEK200bn in total by the end of June 2016.

“Economic activity in Sweden is strengthening and inflation is showing a clear upward trend. 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 said.

The central bank said that overall, its assessment is that monetary policy needs to be more expansionary in order to underpin the positive development in the Swedish economy and safeguard the robustness of the upturn in inflation.

“It is important that inflation rises and stabilises around 2%. This contributes to long-term inflation expectations that are compatible with the inflation target.

"The Riksbank still has a high level of preparedness to quickly make monetary policy even more expansionary if the inflation prospects deteriorate, even between the ordinary monetary policy meetings.”