(Corrects par 2 to show Riksbank has bought 40 (not 30) percent
of outstandig government bonds)
* Dec CPI 1.7 pct yr/yr, CPIF 1.9 pct yr/yr
* Analysts see cbank done with easing
* Swedish crown strengthens
STOCKHOLM, Feb 22 Underlying inflation in Sweden
hit its highest level in six years in December, rising to within
touching distance of the central bank's 2 percent target and
supporting a view that the Riksbank is done with monetary policy
The central bank has taken rates deep into negative
territory and bought up around 40 percent of the stock of
outstanding government bonds in its fight to push up prices,
despite worries about rising levels of household debts.
Underlying inflation, which strips out the effect of rate
changes, hit 1.9 percent in December while minutes from the last
monetary policy meeting showing several rate-setters believe the
cost of further stimulus outweighs the benefits.
"Overall, this strengthens our view that there will not be
any more rate cuts, nor will there be an extension of
quantitative easing," Knut Hallberg, economist at Swedbank said.
The figures and the minutes boosted the crown, which gained
around 0.4 percent to stand at around 9.50 to the euro at 0937
Sweden's economy has boomed in recent years and criticism of
the Riksbank's steely focus on reaching its 2 percent target has
Household debt levels are among the highest in Europe,
measured against disposable incomes, while house prices have
But the Riksbank has argued that it has had little choice
but to follow in the footsteps of the European Central Bank or
risk a stronger crown choking off a pick up in prices.
Minutes of the last monetary policy meeting showed that
several policy-setters now see the risks of easier policy as
outweighing the benefits, given that the upturn in inflation is
on a firmer footing, unemployment is falling and that the
central bank is running out of ammunition.
"There is probably some monetary policy gunpowder left, but
certainly not an unlimited amount," Deputy Governor Henry
Ohlsson said in the minutes.
"What remains should be saved for situations when the need
is greater than it is now."
The Riksbank held its key repo rate at -0.50 percent and
extended its bond purchase programme to the middle of the year
at its last meeting in December.
Rate-setters Ceclia Skingsley and Henry Ohlsson argued for
no change in monetary policy in December while Deputy Governor
Martin Floden wanted a smaller expansion of the Riksbank's
bond-purchase programme, forcing Governor Stefan Ingves to use
his casting vote in favour of more aggressive policy
(Reporting by Stockholm Newsroom)