Swedish c.bank holds key rate at 4.00%, points to cuts ahead

Sweden's central bank kept its key interest rate unchanged at 4.00% on Thursday as expected and said it might be able to ease policy sooner than was indicated in the November forecast.

The pace of inflation has been dropping fast, encouraging hopes that central banks will start to ease policy in the first half of this year, starting with the U.S. Federal Reserve and with the European Central Bank not far behind "If the prospects for inflation remain favourable, the possibility of the policy rate being cut during the first half of the year cannot be ruled out," it said in a statement.

The Riksbank also said that there were risks to the inflation picture, for example renewed supply shocks resulting from the geopolitical unease, company pricing behaviour not yet having normalised, or the krona weakening substantially once again. It said it would increase the pace of bond sales from February.