April 13, 2015 / 7:15 AM / 5 years ago

Swedish central bank governor worried about strengthening crown

BERLIN, April 13 (Reuters) - Sweden’s central bank governor Stefan Ingves said in a German magazine interview that he was concerned about the impact on the crown of the European Central Bank’s quantitative easing policies.

The Riksbank has already cut interest rates into negative territory to reduce the allure of the crown and is locked in a high-stakes currency war with the ECB that could stave off deflation but risks creating another property bubble.

“The ECB is operating extremely expansive monetary policies,” Ingves told the WirtschaftsWoche magazine.

“We don’t want our currency to appreciate too strongly and push import prices down. That speaks for negative interest rates,” he said.

The Riksbank is worried a strengthening crown will reverse a recent upturn in consumer prices and raise the spectre of deflation damaging Sweden’s growing economy.

“At the same time, the events in the euro zone have an influence on us and our exchange rates,” Ingves said.

He added that Sweden will not enter the euro zone for the foreseeable future. “That issue is politically dead at the moment,” he said. “There is no majority in Sweden to enter the euro zone.”

A Reuters poll found the Swedish and Norwegian currencies are expected to appreciate against the euro over the coming year as fundamental economic strength and aggressive quantitative easing by the ECB outweigh looser domestic monetary policy. (Reporting by Erik Kirschbaum; Editing by Hugh Lawson)

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