Swedish retail sales growth accelerated last month after the central bank cut interest rates to support the slowing economy growth.
Sales grew an annual 2.5 percent in December, compared with 0.9 percent the previous month, Stockholm-based Statistics Sweden said today. The median estimate in a survey of five economists by Bloomberg was for a 1.4 percent increase. Monthly retail sales rose 1.2 percent.
Sweden’s central bank on Dec. 18 reduced its benchmark interest rate by a quarter of a percentage point for a fourth time in a year, bringing it to 1 percent, as the Nordic country suffers from slowing export demand. The bank predicted it will keep the benchmark rate unchanged until the end of this year.
Lending to households rose an annual 4.5 percent in December, slowing from 4.6 percent in November, Statistics Sweden also said today. Lending was estimated to rise 4.6 percent, according to the average of four economist estimates.
Record household indebtedness has prompted the Riksbank to discuss the possibility of introducing loan limits relative to household incomes, or forcing amortization of mortgages to ease imbalances. While an 85 percent cap on loans relative to property values that was introduced in October 2010 has slowed borrowing growth from levels above 10 percent between 2004 and 2008, more measures could be needed to curb debt further to avoid a housing bubble, the central bank has said.
Sweden should target annual household borrowing growth of no more than 4 percent, Finance Minister Anders Borg has said.
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