Riksbank Deputy Governor Per Jansson said he welcomed the krona’s weakening since April as he called the bank’s current benchmark rate “very low.”
The board last month delayed the timing of a rate increase by about a year to late 2014, in part as the krona’s strength has slowed inflation and companies have struggled with weak demand in the largest Nordic economy. Riksbank Governor Stefan Ingves acknowledged last month that the strong krona had undermined efforts to achieve the inflation target.
“When we presented this new forecast for the repo rate the krona weakened a lot and that also continued for a while thereafter, and that’s in some sense welcome as it eventually helps us when it comes to the inflation outlook,” Jansson said today in a speech in Koeping, Sweden.
The krona has surged 27 percent versus the euro since the end of 2008, sparking calls from exporters to stem its gains. While policy makers, including Prime Minister Fredrik Reinfeldt, earlier this year showed little concern, they stepped up their rhetoric to cool the krona this month after governments from Zurich to New Zealand acted to prevent currency appreciations.
While the krona has weakened about 2 percent since the April 17 meeting, it’s still up 5 percent in the past year against the euro. The krona lost 0.6 percent today to trade at 8.5940 against the euro as of 11 a.m. in Stockholm.
Consumer prices fell an annual 0.5 percent in April. Adjusted for mortgage costs, prices rose 0.5 percent, well below the bank’s 2 percent target.
Jansson, who voted for unchanged rates at the last meeting, said the krona level isn’t a “dramatic” issue at the moment.
“There may be individual companies with a certain speciality that end up with problems from a quick strengthening of the krona in that way, and that’s not my point, but we are a macro institution that should look to the whole country,” he said. “From our perspective it’s hard to paint a picture that we’re close to death because the krona is so strong.”
Jansson, one of six Riksbank board members, also said next week’s first-quarter gross domestic product figure will be “very important” ahead of the July rate meeting.
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