Sveriges Riksbank, Sweden's central bank, lowered its benchmark interest rate further into negative territory on Thursday, as policymakers increase efforts to ward off deflation from taking hold in the largest Nordic economy.
The Riksbank said it was lowering the benchmark interest rate by 15 basis points to -0.50% from -0.35%, surprising most market analysts, who expected a 10 basis point cut to -0.45%.
Purchases of government bonds will continue for the first six months of this year, in accordance with the plan adopted in October.
In a statement accompanying the announcement, the central bank said, "There is still scope to cut the repo rate further. The Riksbank is also analyzing whether it is possible within the operational monetary policy framework to implement other measures to underpin repo rate cuts.”
Following the announcement, the Krona plunged against the U.S. dollar, with USD/SEK rising 0.94% to trade at 8.4541, compared to 8.3774 ahead of the decision.
The Krona was also down sharply against the euro, with EUR/SEK jumping 1.26% to hit 9.5764 from around 9.4826 earlier.
Reference: Investing
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