Left Menu
Development News Edition

Swedish central bank boosts QE programme to fight pandemic downturn

The Riksbank said it would increase its asset purchase programme by 200 billion crowns to 500 billion and extend its duration to the end of June 2021. The central bank will also begin buying 10 billion crowns in corporate bonds in September.

Reuters | Stockholm | Updated: 01-07-2020 14:39 IST | Created: 01-07-2020 14:28 IST
Swedish central bank boosts QE programme to fight pandemic downturn
Representative image Image Credit: Wikipedia

Sweden's central bank held its key rate at 0% as expected on Wednesday and substantially boosted the size of its asset purchases, including corporate bonds for the first time, as it tries to soften the economic blow from the coronavirus pandemic. While Sweden has been hard hit by the outbreak and measures to slow the spread of infection, it looks to be through the worst and to have come off more lightly than many other countries.

The central bank expects the economy to shrink a relatively mild 4.5% this year, though the government sees a 6% contraction. Either would be better than the double-digit falls forecast for many parts of Europe. Nevertheless, the central bank said further measures were needed to support the recovery.

"To avoid an unnecessarily prolonged and deep decline in the economy and inflation, monetary policy needs to continue to contribute to the smooth functioning of credit supply in the economy and to keeping interest rates low," the central bank said in a statement. The Riksbank said it would increase its asset purchase program by 200 billion crowns to 500 billion and extend its duration to the end of June 2021.

The central bank will also begin buying 10 billion crowns in corporate bonds in September. Until now, it has bought government debt, mortgage-backed debt, commercial paper, and municipal bonds. In addition, it will cut interest rates and extend maturities on lending to banks.

The central bank has not cut its benchmark repo rate, arguing that it would not help much in boosting demand, but did not exclude that if needed. "They are very hesitant to cut rates and we don't think they will in this period," said Swedbank economist Knut Hallberg. "I think central banks see that in this crisis we need a strong banking sector and negative interest rates aren't good for banks."

Analysts had forecast no change in rates but some had expected that the Riksbank would follow the lead of the European Central Bank in boosting its quantitative easing program, partly over worries of a stronger Swedish crown. The crown initially weakened against the euro but recovered to trade roughly unchanged compared to immediately prior to the announcement.

Earlier this month, the ECB extended its emergency bond purchase scheme to mid-2021 and increased it by 600 billion euros ($675 billion) to 1.35 trillion euros. ($1 = 9.3236 Swedish crowns)



Why COVID-19 is unstoppable in USA despite it being ranked at the top of GHS Index?

Several worst-hit countries such as Italy, France, Spain, the UK, Canada, and Russia have peaked COVID-19 cases in April. Almost all of them have gradually flattened the curve. However, the USA is setting new daily records of infections tha...

COVID-19 seems cooking biggest ever global scam

The increasing number of corruption cases on COVID-19 funds from throughout the world and involvement of high profile persons indicate that the countries cant ignore corruption in their pandemic response programs. This has generated the nee...

Health Management Information Systems lack holistic, integrated, and pandemic resilient character

Being a part of the United Nations system, the World Health Organization WHO deserves its share of rebuke for its alleged failure issue COVID-19 health emergency alerts on appropriate time. However, the pandemic has also exposed loopholes i...

Pride in the time of coronavirus: a welcome move online?

This year is different in many ways not least as celebrations are also taking place against the dramatic backdrop of a global health crisis and a resurgence in grassroots activism following the death of George Floyd in Minneapolis. ...


Latest News

As Lebanon crisis spirals, families barter for food on Facebook

One Lebanese woman asked for sugar, milk and soap in exchange for a childs dress. Another wanted canned goods in return for gym equipment. A 65-year-old seamstress now exchanges her sewing services for food, because her clients can no longe...

GSK says long-acting HIV prevention drug 65% more effective than Truvada

Britains GSK said on Tuesday that an injection of its cabotegravir drug given every two months was found to be 65 more effective in preventing HIV infections than Gileads Truvada daily oral pills. HIV incidence rate - or the number of peopl...

Bolivia's first transgender news anchor puts LGBTQ issues front and center

Leonie Dorado, 26, is blazing a trail as the first transgender news anchor in Bolivia, a traditionally conservative South American nation currently in the grip of the coronavirus pandemic.Dorado, the new co-host of Bolivian program Aby Ayal...

Reuters Health News Summary

Following is a summary of current health news briefs. U.S. tops 130,000 deaths from COVID-19 after record surge in casesThe number of U.S. coronavirus deaths exceeded 130,000 on Monday, following a surge of new cases that has put President ...

Give Feedback