Sweden’s economy is still on track to recover which means the central bank’s forecasts from last month for growth and interest rate increases is largely intact, Deputy Governor Cecilia Skingsley said.
“The picture that we painted in September that we will see a slow recovery and that we will support that with our low interest rate for a long time is mainly still intact,” Skingsley said today in a speech in Borgholm, Sweden.
The Riksbank last month predicted it will keep its main rate unchanged at 1 percent until late next year as it forecast a slow recovery of Sweden’s export-reliant economy. It refused to cave in to calls to cut its main lending rate to boost below-target inflation in part because of concerns of rising house prices and record private debt levels.
“Indebtedness is not something we can ignore,” Skingsley said. “We don’t even want to get close to the situation” as in the U.S., Ireland and Denmark where house prices have fallen, she said.
Swedish industrial production fell more than analysts predicted in August, Statistics Sweden said today. Consumer prices rose less than forecast by an annual 0.1 percent and monthly 0.4% last month.
“It’s always like that when economies are recovering that it’s two steps forwards and one step backwards,” she said. “We can’t solve the euro crisis with the Swedish repo rate,” which is “important to remember,” she said.