Photo: Riksbanken
The Swedish Central Bank. Photo: Riksbanken

Key interest rate to stay at zero for longer

Sweden's key repo interest rate will probably stay at 0 percent for at least the next two years, the Swedish Central Bank announced Tuesday.

The bank had previously said it expected to hike interest rates again in the summer of 2016, but has now pushed that back to the end of the year. It says the falling price of oil will mean less inflationary pressure on the economy.

"Inflation is too low and is expected to be somewhat lower for a period of time, primarily due to the falling oil price. In addition, inflation expectations in the longer run have fallen slightly further and are below the inflation target of 2 per cent," the bank writes in a press release.

The bank hopes the record-low interest rate will lead to an increase in economic activity in Sweden, which would push inflation up toward the target of two percent. It is currently at -0.2 percent.

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