Swedish estimations for interest rates & currency during 2010
Swedish Riksbanken speech insisted that Sweden’s rate is planned to remain flat until autumn 2010. Ingves pointed out the risk of a potential real estate bubble if the current interest rate levels remains for a long period.
He continues: “We believe that interest rates will be significantly higher in a few years from now”. In 2011, the interest rates will probably go up sharply, from less than 1% to 3%. At least if we are to believe the current forecast from the Swedish Riksbank.
Why was the Swedish interest rates unchanged?
Everything indicates that the recovery in the economy continues, while inflation pressures continue to be low.
With the Riksbank’s inflation target of 2 percent and to simultaneously support the economic recovery of the Riksbank decided to leave the repo rate unchanged at 0.25 percent.
Deputy Governor Lars E.O. Smith, however, expressed reservations against the decision to leave interest rates unchanged. He advocated instead a reduction in the rate to 0 percent. Lars E.O. Smith feels that such interest rates gives a better balanced monetary policy, expected to lower unemployment as a result, giving efficient use of resources and a CPIF inflation closer to target, without causing any problems for the financial markets or the financial stability.
Ingves positive about Swedish krona in 2010
Stefan Invges also believe in a strengthening of the Swedish krona already in 2010, despite the low key interest rates. What his assessment is based upon is still unclear.
