* Riksbank leaves rates unchanged
* Surprises markets with continued easing bias
* Graphic on inflation, crown - bit.ly/2lPlJKy
(Adds comments from Riksbank governor)
By Johan Ahlander and Simon Johnson
STOCKHOLM, Feb 15 Sweden's central bank held
rates unchanged at -0.50 percent on Wednesday but retained its
view that more cuts could come, surprising markets which had
expected it would signal that five years of ever looser policy
had come to an end.
Negative interest rates and a hefty quantitative easing
programme are looking increasingly out of sync with a Swedish
economy in high gear.
But the Riksbank is worried a global recovery could be
tripped up by Brexit, slower growth in Europe and a more
protectionist United States. It also knows that signals of
tighter policy could lead to a stronger crown currency.
"Should it be the case that they (the United States) move
toward increased protectionism, that would probably lead at some
point to lower growth which is not good for Sweden which has
large exports and imports," Riksbank Governor Stefan Ingve said
at a news conference.
"What will happen when it comes to Brexit is still somewhat
unclear... We have elections in France, Holland and Germany. It
is unclear what that will mean in terms of economic policy," he
The crown weakened from around 9.44 to the euro to 9.46
shortly after the decision.
"The Riksbank was a little more dovish than expected, on the
margin," Knut Hallberg, economist at Swedbank, said. "Today's
decision shows the Riksbank will be very cautious in its roll
back (of expansive monetary policy)."
Many analysts had expected the Riksbank to signal it now saw
inflation on firmer ground and that its next move would be to
shift toward tighter policy, if very slowly.
After years of undershooting, inflation was nudging the 2
percent target in December, while other domestic data has
prompted analysts to forecast economic growth this year near 3
percent - well above trend. < bit.ly/2lPlJKy >
However, the central bank retained its short term easing
bias and the crown currency weakened.
"The repo rate path reflects the fact that there is still a
greater probability that the rate will be cut than that it will
be raised in the near term," the Riksbank said in a statement.
The central bank renewed a mandate for Governor Ingves to
intervene in the currency market should the crown currency
strengthen sharply and choke off the recent uptick in inflation.
And in what analysts said was a further dovish signal, it
adjusted downward its view of the long term normal interest
All 18 analysts in a Reuters poll had forecast no change in
($1 = 8.9648 Swedish crowns)
(Reporting by Stockholm Newsroom; Editing by Jeremy Gaunt)