Sweden's krona has hit a high against sterling not seen since 1992, following the Riksbank decision to leave the repo rate unchanged at 1%.
Sweden’s krona has hit a high against sterling not seen since 1992, following the Riksbank decision to leave the repo rate unchanged at 1%.
The local currency also strengthened against the euro and dollar. It is now at its strongest against the dollar since August 2011.
The central bank’s decision has also pushed up market interest rates. The two-year interest rate was up 6bps to 0.9%, and the 10-year interest rate gained 7bps to 2.1%, according to Dagens Industri.
The decision by central bank governor Stefan Ingves (pictured) and colleagues to leave the repo rate unchanged has been criticised by SEB chief economist Robert Bergqvist, reports Svenska Dagbladet.
“If an interest rate cut does not put in dange the inflation target or financial stability, then it is the Riksbank’s role to lower the rate, even if it should only create a single new job,” Bergqvist said.
SEB’s economists had calculated that SEK would strengthen even with an interest rate cut today. However, because this has not happened, the krona is likely to appreciate even faster.
Interest rates in Norway are being tipped to remain unchanged until March, following the publication of data showing the country’s economic growth slowed to a rate of 0.3% in the fourth quarter of 2012, down from a rate of 0.8% in the previous quarter.
DNB Markets suggested that the slowing rate of growth would give the country’s central bank more time before announcing any rate hikes.
The figures exclude the impact of the country’s hydrocarbon sector (oil and gas),and was slightly lower than most analysts expected.
However, Norway’s growth overall through 2012 was the best since 2007, the figures also suggest, which is why the country’s central bank is expected to start tightening its monetary policy. The country’s so-called ‘mainland’ economy advanced 3.5% through the year, with particular growth in the building and construction sector – up 7.4% on the previous year, as the residential property bubble showed no signs of slowing.