Riksbank doves defeated on rate cuts despite broad support for easing, minutes show
Board members disagreed over the danger posed by high household debt in Sweden, ultimately voting to keep rates on hold, according to the minutes of the Riksbank's latest monetary policy meeting, published today.
The minutes showed that Lars Svensson and Karolina Ekholm, who backed cuts of 50 basis points and 25bp respectively, were defeated in the final vote by the four other members, who raised concerns that high debt could worsen Sweden's already high unemployment, even though they "agreed that monetary policy needs to be more expansionary".
Svensson argued that it was "not at all self-evident" that high household debt was causing problems. He said houses could be overvalued, lending standards inadequate or banks and borrowers had insufficient resilience.
Svensson presented his own analysis that suggested Sweden's low inflation gave the central bank plenty of room to cut rates, although Marianne Nessén, head of the monetary policy department, emphasised that Svensson's calculations "had not been quality assured" by her department.
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