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Zero percent interest rate to be extended in Sweden for at least 18 months

Sweden’s Riksbank is keeping its record low base (repo) rate at zero until at least the second half of 2016, it has announced. The decision follows an assessment from the Swedish Central Bank that the repo rate must remain at zero percent to help boost inflation and increase the country’s money supply.

“It is not until the second half of 2016 that it will be appropriate to begin raising the repo rate,” the bank said in a statement.

The bank is hoping that the low repo rate, together with rising demand from abroad, will lead to an increase in economic activity in Sweden over the next few years, raising inflation.

Sweden’s Central Bank cut interest rates to zero – a record low – in October 2014 as it stepped up its increasingly desperate fight against deflation and reversed a series of rises that had brought interest rates up to 2% at the end of 2011.

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