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Riksbank Won’t Cut Rates Again as Growth Revives, NIER Forecasts

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March 27 (Bloomberg) -- Sweden’s central bank won’t cut its main lending rate further as the largest Nordic economy will expand faster than previously estimated, the National Institute of Economic Research said.

The Riksbank will keep its repo rate at 1 percent this year as the $500 billion economy will grow 1.3 percent and 2.3 percent in 2014, NIER said today in a statement on its website. In December, NIER forecast the Riksbank would cut rates to 0.75 percent this year and predicted an economic expansion of 0.8 percent this year and 2.2 percent in 2014.

“In recent months confidence has improved at firms and among households,” the NIER said. “This is a sign of somewhat stronger growth in Sweden in the period ahead.”

The central bank has cut its main interest rate four times since December 2011 to boost growth in the economy, which has suffered from weak demand for its exports. Sweden sells about half of its output abroad, of which about 70 percent is bound for Europe where countries are cutting spending to reduce debt.

Consumer prices will rise 0.2 percent this year and 1.1 percent in 2014 -- both below the Riksbank’s 2 percent inflation target, NIER predicted. Unemployment will rise to an average 8.2 percent this year and stay there in 2014, it said.

To contact the reporter on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net.

To contact the editor responsible for this story: Jonas Bergman in Oslo at jbergman@bloomberg.net

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