3Q CENTRAL BANKING: Sweden Seen Standing Ready With Rate Cuts, More Stimulus

 
   By Charles Duxbury 
 

        The Riksbank cut rates in early July and repeated its statement that it stands ready to do more, even between scheduled meetings, if inflation falls below its forecasts again.
        Analysts are already forecasting another rate cut for September.
        The central bank also increased its government bond-buying program in July and is now targeting SEK135 billion ($16.01 billion) by year end. It said it could extend this further or cut interest rates even lower to lift inflation closer to a 2% target.
        Supplying banks with cheap money--so they can extend low cost loans to companies--or even direct currency market interventions are also options the Riksbank has said it will use if it needs to.
        Inflation in Sweden, at 0.1% in May, remains very low and a range of disinflationary factors could block the Riksbank's path towards its 2% goal.
        The European Central Bank's massive stimulus efforts and the renewed turbulence in Greece both risk raising the attractiveness of the Swedish krona against the euro. If the krona rises, import prices would fall and a vital source of inflationary pressure would be lost.
        The Riksbank has now stepped back from its stance of "leaning against the wind" which saw it use higher interest rates to slow bank lending to households.
        Since last year, the central bank has said that inflation is its sole focus and it is for lawmakers and financial market regulators to cap rising levels of household debt before they trigger a financial crisis.
        The Riksbank will announce its next policy decision September 3.
        --Write to Charles Duxbury at charles.duxbury@wsj.com
        (END) Dow Jones Newswires

        July 08, 2015 05:59 ET (09:59 GMT)

#FX
#Forex
#SaleForex
#SwedenSeen
#StandingReady
#RateCuts
#MoreStimulus