Sweden’s central bank kept its lending rates on hold on Wednesday after signs of an uptick in inflation and stronger economic growth, surprising markets which had expected a further cut into negative territory, Reuters reported. The Riksbank expanded bond buying and pushed monetary tightening further into the future, but left the key repo rate at -0.25%, welcome news for Swedish banks which had started to complain that ultra-loose monetary policy could put financial stability at risk. Sweden is battling a deflationary threat just as it enjoys one of Europe’s strongest growth rates, accompanied by concerns about a housing bubble and one of the region’s highest household debts. This poses a dilemma for central bankers.
