Interest Rates Kept Unchanged at 0.25%

Bank of Sweden leaves the key interest rate, the repo rate, unchanged at record low 0.25 %. The Bank notes that the "signs of a turnaround in the economy have become increasingly clear, but the recovery is from a low level."

The rate is expected to stay where it is until the autumn of next year. The GDP is expected to go into plus towards the end of this year, but unemployment will continue to dog the labour market, with employment not rising again until 2011.

The Bank's decision was not unanimous, with two members of the Board advocating raised interest rates slightly earlier than forecast, and the Deputy Governor Lars E.O. Svensson wanting to cut the interest rates to zero and hold them there for a year.

In a statement, the Bank notes that "the situation in the financial markets has improved, it is still not normal." In an attempt to keep low interest rates on loans to companies and households, the Bank has decided to offer further loans totalling SEK 100 billion to the banks at a fixed interest rate over the next year.