Sweden’s central bank, the Sveriges Riksbank, just surprised markets with a decision to boost its quantitative-easing program.
The new program means asset purchases will be increased by 65 billion Swedish krona ($7.64 billion or £4.99 billion) to 200 billion krona ($23.50 billion 0r £15.37 billion) by the end of June 2016.
Though the Riksbank cut rates earlier this year, sending its benchmark rate to -0.35% in July, it held rates on Wednesday.
Inflation is stronger in Sweden than it is in the eurozone, though the relatively small economy can’t help being affected by what’s going on in the currency union.
Here’s what the Riksbank says:
The Riksbank’s expansionary monetary policy has contributed to a stronger Swedish economy, a fall in unemployment and a clear upward trend in inflation since last year. In September, CPIF inflation was 1.0 per cent, and excluding energy prices, inflation was 1.8 per cent. The trend of rising inflation is expected to continue. But compared with the assessment at the previous monetary policy meeting, the inflation forecast has been revised down slightly. This depends on poorer inflation prospects abroad as well as on a new assessment that demand needs to be stronger in Sweden in order to stabilise inflation around 2 per cent…
Overall, the Executive Board’s 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.
The rate-setters also stressed that they were ready and willing to do more if necessary.