Excerpt from the statement by the Executive Board of the Riksbank:
Economic developments in Sweden and abroad have been largely in line with the Riksbank's forecasts for some time now. There are signs of an improvement in the euro area and the recovery in the United States is continuing. However, major challenges still remain. The political disagreement in the United States over fiscal policy is one source of uncertainty, as are the effects of the Federal Reserve's tapering of its asset purchases. Despite a slightly more subdued development in several emerging markets, the world as a whole is expected to grow at a relatively good rate during the coming years.
Inflation is low, and measured in terms of the CPIF is expected to be around 1 per cent for a further period. When economic activity improves, import prices and wages will rise faster. Swedish companies will then also find it easier to pass on their cost increases to prices. This means that inflation is expected to attain 2 per cent in 2015.
The repo rate needs to remain low to support the economic upturn and contribute to inflation rising towards 2 per cent. The Executive Board of the Riksbank has therefore decided to hold the repo rate unchanged at 1 per cent. The repo rate needs to remain at this low level until economic activity is stronger and inflation rises. As before, the repo rate is not expected to be raised until the end of 2014.