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Sweden’s central bank retained its key interest rate and the asset purchase programme on Tuesday, to support economic recovery and subdued inflation.

The Executive Board of Riksbank decided to hold the repo rate at zero percent. The rate is set to remain at the current level in the coming years.

The board also kept the envelope of the asset purchase programme unchanged at SEK 700 billion.

The bank vowed to design monetary policy so that it supports the recovery and inflation as long as necessary.

The economic outlook is slightly brighter now than it was in February, but the pandemic is not over, and inflationary pressures remain low, the bank said.

The growth outlook for 2021 was downgraded to 3.7 percent from 3 percent and the 2022 forecast to 3.6 percent from 3.9 percent. The growth for 2023 was seen at 2 percent instead of 2.4 percent.

According to Riksbank, total economic activity will approach more normal levels towards the end of the year.

The bank said it will take time before inflation is more permanently close to the target of 2 percent.

Inflation is forecast to rise to 1.4 percent this year and then to 1.5 percent in 2022 and 1.7 percent in 2023. The projections for 2021 and 2022 were lifted from 1.3 percent, while that for 2023 was downgraded from 1.8 percent.


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