The Swedish crown fluctuated sharply after the Riksbank announced its policy decision to expand QE and keep its benchmark rate unchanged.
Sweden’s central bank expanded its bond purchase programme by 65 billion Swedish crowns to a total of 200 billion crowns and held the benchmark repo rate at -0.35% as expected.
The Riksbank has cut rates three times this year in an effort to fight risks of deflation. Rates have been lowered from 2.0% in late 2011 The central bank said in a statement that it pledges to keep interest rates at record lows for a longer time and said it would intervene in the currency market if the strong Swedish crown threatens inflation. The bank also cited uncertainty in the global economy as a reason to expand QE.
Helping the Riksbank in its decision not to cut rates was inflation data which showed consumer prices rose in September for the first time in four months. Data released on October 13 showed inflation in Sweden rose an annual 0.1% in September, from minus 0.2% in August. Forecasts were for zero inflation.
After today’s Riksbank policy announcement the euro/crown pair fluctuated between 9.3351 and 9.4319 before steadying around 9.3560 soon after the news at 08:30 GMT. The dollar/crown pair traded between 8.4526 and 8.5429 before steadying around 8.4645.