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Nerves rattle at Riskbank amid inflationary threat

As the bond selloffs showed its ugly head amid looming inflationary threat, it seems that nerves of central bankers are rattling all around the globe. In October Sweden’s Riskbank kept the rates at -0.5 percent but surprised the market with a major dovish outlook. It said that the central bank will not be increasing interest rates until early 2018 and its stands ready to expand its bond purchase program at its December meeting.

However, At a recent speaking, Risk bank’s deputy governor Martin Flodén question the value addition by further interest rate cuts or bond purchases. He said that ending the bond buying program is an open option at the December meeting saying that it is not obvious that further interest rate cuts and bond buying would help the central bank reach its inflation goal.

After bottoming below zero in 2014, inflation has stayed above zero mark since late last year and is currently at 1.2 percent. Swedish Krona has strengthened over the comments of the deputy governor but still hovering around the weakest level since 2008.

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