HELSINKI, Aug. 20 (Xinhua) -- Sweden's central bank, the Riksbank, on Wednesday kept its policy rate unchanged at 2 percent, citing above-target inflation and weak economic activity, but signaled a possible cut later this year.
In a statement, the Riksbank said inflation had risen more than expected during the summer mainly due to temporary factors. Several indicators suggest it will return to the two-percent target, while growth remains subdued.
Internationally, the bank said global developments were broadly in line with expectations but warned of persistent geopolitical risks.
"Although developments in inflation and economic activity during the summer have deviated somewhat from the forecast in June, the Executive Board assesses that the outlook remains largely the same," the bank said.
The bank therefore left the policy rate unchanged at 2 percent but still sees some chance of a rate cut later this year. The policy rate decision applies from Aug. 27.
The Riksbank pointed to sluggish household consumption and a labor market showing no clear signs of improvement, though rising real wages, earlier rate cuts and improving business confidence could support growth.
"The unexpectedly high inflation calls for vigilance," the bank warned, highlighting risks related to companies' pricing behavior, the persistence of inflationary pressures and global uncertainties including U.S. tariff talks, the conflict in Ukraine and tensions in the Middle East.
According to Statistics Sweden, inflation measured by the CPIF (consumer price index with a fixed interest rate) stood at 3 percent in July, up from 2.8 percent in June. The unemployment rate reached 8.7 percent in the second quarter. ■
