Riksbank Set to Keep Rate Steady in April, Wickman-Parak Says
Sweden’s central bank will probably keep its main lending rate unchanged at its April meeting, Riksbank Deputy Governor Barbro Wickman-Parak said.
“The biggest likelihood is that we don’t do anything,” she told reporters today in Linkoeping, Sweden. “If we do something, the likelihood is bigger for a cut than an increase.”
Sweden’s central bank earlier this month kept its benchmark interest rate unchanged at 1 percent after cutting it four times since December 2011 to boost growth in the export-reliant economy hit by weak demand from debt-ridden Europe. Policy makers, who have signaled unchanged rates until 2014, will next publish their rate decision on April 17.
Economic data have come in “roughly” in line with the Riksbank’s latest forecasts, Wickman-Parak said.
Swedish exports, which account for about half of the country’s output, have been hurt by a strengthening currency. The krona gained 1.7 percent against the euro this year to trade at to 8.4395, making it the second-best performing major currency tracked by Bloomberg after the Brazilian Real.
A reasonably valued krona is “where it is right now, perhaps around there,” Wickman-Parak said, citing the economy’s “strong fundamentals.”
She also responded to criticism today from Stockholm University Professor Lars Calmfors who urged the Riksbank to consider scrapping its 2 percent inflation target and instead to introduce a price level target to increase its ability to boost growth. He also said the Riksbank should be given complementary targets for growth, employment and unemployment.
“I don’t think that’s so good,” Wickman-Parak said. “There’s always a cost to change something and if we’ve invested in something that we think is working then it’s not an insignificant cost associated with changing it.”
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