2019.02.1304:06:00UTC+00Sweden CB Holds Key Rate Unchanged After December Hike

Sweden's central bank left its key interest rate unchanged in February on lower growth and near-target inflation, after raising it in December, and reiterated that the next hike would come in the second half of this year.

The Executive Board decided to hold the repo rate unchanged at -0.25 percent, the Riksbank said in a statement on Wednesday. The decision was in line with economists' expectations. The quarter-basis point December hike was unexpected and was the first since July 2011. "The strong economic activity and rising cost pressures both in Sweden and abroad mean that the conditions are good for inflation to remain close to the target in the coming years," Riksbank said. "This outlook has not changed to any great extent since December."

That said, several factors suggest that monetary policy needs to proceed with caution, the central bank added. The trimmed the growth forecast for this year to 1.3 percent from 1.5 percent predicted in December and the outlook for next year to 1.9 percent from 2 percent. The inflation forecast for this year was raised to 2 percent from 1.9 percent, while the projection for next year was left unchanged at 1.8 percent.