Economic news

Swedish Central Bank adds $23B to QE, 2nd Pandemic Wave Hits

STOCKHOLM, Nov 26 (Reuters) - Sweden’s central bank said on Thursday it would expand and extend its asset-purchase programme to support the economy through a second wave of the coronavirus pandemic, as it kept its benchmark interest rate on hold at 0%, as expected.

Much of Europe is re-imposing lockdowns and Sweden is tightening restrictions, so the economic recovery is expected to stall in the coming months. The slowdown is still forecast to be milder than in the second quarter, when Swedish gross domestic product contracted a record 8.3%.

“By expanding and extending the asset-purchase programme, the Riksbank is making it clear that comprehensive monetary policy support will be available as long as it is needed,” the Riksbank said in a statement.

The central bank will add 200 billion crowns ($23.47 billion) to its quantitative easing programme, taking it up to 700 billion, also extending purchases to the end of 2021.

Further tweaking will see the central bank include treasury bills and sovereign and municipal green bonds. The Riksbank will also increase the pace of purchases in the fourth quarter.

“The expansion of its asset-purchase programme shows that it (the Riksbank) will not stand idly by as the economy heads south in Q4,” David Oxley, senior European economist at Capital Economics, said in a note.

Two rate-setters voted against the expansion of the QE programme.

Deputy Governor Anna Breman wanted an additional 100 billion, while Martin Floden said the Riksbank should merely pledge that policy would remain expansionary as long as necessary.

The fresh boost to the Riksbank’s economic rescue package comes ahead of the European Central Bank’s meeting in December at which it is widely expected to take more action, likely in the form of more bond purchases or cheap credit for banks.

The Riksbank’s programme includes loans and asset purchases to support credit supply and liquidity in the banking system and soften the blow to the economy of a virus that has killed more than 6,500 in Sweden.

It has not cut the benchmark interest rate.

($1 = 8.5265 Swedish crowns)

Reporting by Stockholm Newsroom; editing by Niklas Pollard, Larry King

Source: Reuters

 


To leave a comment you must or Join us


More news


Back to economic news list

By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree