Home Central Banks Canadian and Swedish Central Banks Remain Dovish

Canadian and Swedish Central Banks Remain Dovish

Stockholm (Ekonamik) – The BoC and Riksbanken, the central banks of Canada and Sweden, respectively, kept interest rates unchanged at 1.75% and -0.25% at their April Monetary Policy Meetings.

With regards to the BoC meeting, “the biggest surprise in the MPR was the sharp cut to the growth outlook,” according to Benjamin Reitzes, Canadian Rates & Macro Strategist at BMO. “Even after the surprisingly strong January GDP report, the BoC cut its Q1 GDP growth forecast half a point to 0.3% (worse than even our below-consensus 0.7% call). And, Q2 was introduced at 1.3%, a full percentage point below our call.” The strategist concluded that “it’s going to take an exceptionally weak string of data to underperform, suggesting the bar to cut rates is quite high.” Irene Lauro, Economist at Shroders agrees, noting that “the BoC removed its hiking bias by eliminating the reference to the need for interest rates to return to a neutral range”. However, the economist also noted that “the bank believes that the slowdown of growth to a below-potential pace will prove to be temporary, as the BoC left growth expectations for 2020 untouched at 2.1%, which is above the BoC’s estimate of potential growth of 1.8%.”

“The repo rate forecast was lowered for the entire forecast period,” commented Johan Löf, Senior Economist at Handelsbanken Capital Markets about Riksbanken’s policy rates. “The Riksbank now sees an average repo rate of 0.04% in the second quarter of 2020, compared to its previous forecast for a repo rate of 0.23%,” he added. “The Riksbank now sees it as unlikely that the repo rate will be raised this autumn,” concluded the senior economist.

- Advertisement -


Filipe Wallin Albuquerque
Filipe Wallin Albuquerque
Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

Latest articles

Thriving on Covid-19 Challenges

Stockholm (Ekonamik) - Digitalization has certainly mitigated the impact of COVID-19 on businesses, economies and personal lives. After all, digitalization offers the vital infrastructure...

The Battle of Cheap and Expensive

Stockholm (Ekonamik) - The spread of COVID-19 triggered panic among investors in the first quarter of the year and sent markets reeling and company valuations...

Denmark: A Relative Success Story or Too Soon to Tell?

Stockholm (Ekonamik) - Along with a handful of smaller European countries such as Austria and the Netherlands, Denmark is one nation that appears to...

Challenges and Opportunities in Frontier Markets

Stockhom (Ekonamik) - Given the coverage that Europe and the USA have received regarding the effects of COVID-19, it is easy to forget about...