Sweden’s krona soared after a spate of economic data signaled the largest Nordic economy is gaining pace faster than previously estimated, supporting the central bank’s plan not to cut interest rates again.
The krona climbed as much as 0.8 percent and traded 0.5 percent higher at 8.3100 per euro as of 3:27 p.m. in Stockholm. It rose as much as 0.4 percent against the dollar, before sliding 0.3 percent to 6.5081.
The consumer confidence index rose to 2.8 from minus 1 the previous month, the Stockholm-based National Institute of Economic Research said today. Economists predicted confidence would improve to 1, according to the median of 10 forecasts in a Bloomberg survey. A manufacturing confidence index improved to minus 10 from minus 11. It was estimated to gain to minus 8.
“The improvement was due to an increasingly positive view of the Swedish economy,” the NIER said.
The central bank last month forecast it won’t have to cut its main lending rate again, citing signs of an improving economy as financial markets stabilized following the European Central Bank’s pledge to buy bonds of debt-stricken countries. The Riksbank left its main lending rate unchanged at 1 percent last month following four cuts in a year.
The NIER today forecast that the bank will probably keep its main rate unchanged over the next two years, scrapping a forecast for a cut to 0.75 percent this year. The institute raised its estimate for growth this year to 1.3 percent, from an earlier 0.8 percent prediction, and said the economy will expand 2.3 percent next year.
A separate report from the Swedish statistics agency showed retail sales climbed 1 percent in February, beating the 0.2 percent growth estimate in a survey. The country’s trade balance also widened to 7.1 billion kronor in February from 6.2 billion kronor the previous month.
“The outlook for household consumption going forward is also bright,” said Andreas Jonsson, an economist at Nordea Bank AB, in note today. “Households will face decent wage increases which, together with the low inflation, will boost real purchasing power. Mortgage rates will most likely stay low. The favorable stock market developments seen in recent months have improved households’ financial situation further.”