(Sharecast News) - Sweden's central bank left its key interest rate on hold as it assessed the economic impact of the Iran war on inflation.
The Riksbank held its benchmark rate at 1.75% in line with expectations. Sweden's underlying inflation was the lowest in 30 years in April at 0.0%, partly due to a temporary cut in VAT on food, along with a stronger currency and modest wage deals.

"The risk that the war in the Middle East will lead to higher inflation has increased somewhat. However, inflation is currently below the target and the recent outcomes have been clearly lower than the Riksbank's forecast in March," the central bank said.

"In addition, economic activity is weak. This means that there is scope to wait until there is a clearer picture of the effects of the war and the supply shocks it entails."

"If the war were assessed to have large effects on the global economy and lead to a broad and persistent upturn in inflation, the Riksbank would need to raise the policy rate."

Reporting by Frank Prenesti for Sharecast.com

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