Sweden’s krona declined after a report showed consumer prices fell more than anticipated in June, raising pressure on the central bank to increase an historic package of measures to halt a deflationary spiral.
The krona slumped 0.7 percent to 9.404 per euro as of 9:43 a.m. in Stockholm.
Consumer prices fell an annual 0.4 percent in June, more than the 0.2 percent decline estimated in a survey of analysts. Excluding interest costs, the inflation rate fell to 0.6 percent from 1 percent in May.
Swedish policy makers have unleashed unprecedented measures this year to end a period of disinflation, and even deflation, that’s plagued the largest Nordic economy. They were forced to respond after record stimulus by the European Central Bank threatened to drive up the krona and further hamper their fight.
The Riksbank this month cut its repo rate to a record low of minus 0.35 percent to bring back price growth, which has been near zero since the end of 2012. The bank expanded its bond purchasing program by 45 billion kronor ($5.3 billion) until the end of year, adding to the 90 billion kronor already announced.
The Riksbank said this month it has “a high level of preparedness” to add stimulus and reiterated it can “intervene on the foreign exchange market if the upturn in inflation is threatened as the result of, for instance, a very problematic development in the markets.”