The Swedish economy expanded at an annual 2% over the second quarter. However, consumer prices have only increased one month in 2014 and September’s consumer price index was negative 0.4%, the 15th negative monthly reading since the end of 2012. In comparison, the central bank has a 2% target.
While the move to a zero rate seems aggressive, some argue it may be only the beginning. The country may implement greater stimulative measures, which could help move the economy and further depreciate the currency.
“There is a risk today’s measures still fall short of policy objectives, which raises the prospect of unconventional measures such as a negative repo rate or quantitative easing as structural reform does take time,” UBS currency strategist Geoff Yu said in a Wall Street Journal article.
iShares MSCI Sweden ETF
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