* First choice for easing would be to postpone rate hikes -cbank chief
* Mandatory mortgage amortisation reasonable measure to curb debt -cbank
(Adds detail, background)
STOCKHOLM Aug 19 Swedish monetary policy may need to become
more expansive if the inflation outlook falls, the country's central bank chief
said, while urging other policy makers to rein in surging household debt.
The Swedish Riksbank is walking a tightrope between trying to spur
inflation, which is close to zero and has been below its two percent target for
years, and the risk of compounding the problem of rising debt through its own
Speaking at a hearing on monetary policy in front of a parliamentary finance
committee on Tuesday, Riksbank Governor Stefan Ingves said the top choice for
further easing of monetary policy would be to delay any rate hikes.
"We're talking about postponing rate hikes. If that were not to be enough,
we'd have to resort to other measures," Ingves said while pointing out that low
interest rates add to risks of high indebtedness, meaning it was urgent that
lawmakers come up with measures to curb debt levels.
Swedish household debt levels are among the highest in Europe and rising.
Appearing together with Deputy Riksbank Governor Martin Floden, Ingves said
making it making it mandatory to pay down mortgage loans would be a reasonable
measure to tame debt levels, adding that Swedish households amortise too little.
Ingves said there was need for more measures to curb household debt, warning
that monetary policy may also have to be adjusted to that effect.
Sweden's Finance Minister Anders Borg has urged regulators to come up with
suggestions on amortisation demands by November.
"Household debt will increase, and it is desirable that we counteract such a
development with different measures outside of monetary policy," Deputy Governor
Floden told journalists after the hearing that if monetary were to need to
be more expansive, his preferred first measure would be another rate cut.
The Riksbank on July 2 slashed its benchmark rate to 0.25 percent after
headline annual inflation undershooting its 2 percent target for years. Several
central bank governors said the bank may cut again if prices fail to react as
planned to the June cut.
(Reporting by Anna Ringstrom and Johan Sennero, writing by Sven Nordenstam;
Editing by Alistair Scrutton)