Interest rates have swung higher in the market today in Sweden following an op-ed piece by the country's central bank governor Stefan Ingves, which analysts said effectively closes the door on any rate cuts next week.
Interest rates have swung higher in the market today in Sweden following an op-ed piece by the country’s central bank governor Stefan Ingves, which analysts said effectively closes the door on any rate cuts next week.
The bank had been expected to consider cutting rates in light of signals the country’s economy is softening.
But, Ingves (pictured), writing in Svenska Dagbladet, has countered that he and the central bank, Sveriges Riksbank, would not be doing their job properly if they did not express concern over debt burdens within households and companies alike. Rising debts could position the economy for greater weakness, he said.
Ingves said that where there were voices calling for rate cuts to help combat unemployment, this was based on short-term thinking, but that he as central bank governor could not act only on short term interests.
“I also have to take responsibility for the long term consequences of today’s monetary policy,” he wrote.
“And there are risks associated with an all too low interest rate over a long period, which cannot be ignored.”
Svenska Dagbladet cites analysts at Handelsbanken and Swedbank noting that the opinion suggests Ingves has planted his flag firmly in the camp of those at the central bank who feel that interest rates are low enough already.
The OMX Stockholm 30 index has recovered from a year-to-date low in June, but is still off its peak seen in late March. From a closing price of 999.43 on 2 January this year, it closed at 1,075.5 on 17 October, meaning the local stock market has barely moved over the past 10 months.
A number of the country’s biggest industrials have recently announced moves to consider or implement redundancies, and the index has shed some 3% over the past month, the OMX data show.
Shares in all four major banks in the index are down today: Handelsbanken, Swedbank, Nordea and SEB.