Swedish central bank Riksbank has decided to increase the asset purchase program by 200 billion SEK. Now its volume has been determined at the level of 700 billion kroons.
The regulator took such a step, expecting a new downturn in the economy due to new restrictions introduced in the country to contain the COVID-19 pandemic. The expanded program, which will also include Treasury bills, will run until December next year.
The regulator’s message says that it intends not to change the zero value of the repo rate in the coming years. However, if such a need arises due to increased risks for the inflation target, he is ready to reduce the rate again.
The regulator also announced its intention to comprehensively support monetary policy in the future.
According to Central Bank estimates, Sweden’s GDP will fall by 4% in 2020. The forecast for the economic downturn is worsened against its previous estimate of 3.6%. The bank also cut its GDP growth forecast for next year to 2.6% from 3.7%. He expects inflation to slow this year to 0.4% from its current level of 2%. In 2021, it is expected to accelerate to 0.8%.