Swedish central bank set to keep rates steady on Feb. 12, and through 2021: Reuters Poll

FILE PHOTO: The sign for Sweden's central bank is pictured in Stockholm·Reuters

STOCKHOLM (Reuters) - Sweden's central bank is expected to keep its benchmark interest rate at zero at a policy meeting next week and is not expected to alter its stance for the foreseeable future, a Reuters poll showed on Friday.

The Riksbank surprised many in December by lifting the benchmark repo rate to zero, ending negative rates despite signs of a slowing economy and uncertainty over the effects of a trade spat between the United States and China and Britain's exit from the European Union.

The Riksbank said at the time that rates were likely to stay at zero for the coming years.

All 36 analysts in the latest poll said the Riksbank would leave rates unchanged on Feb. 12, with a median forecast that the bank would sit on its hands until at least the final quarter of 2021, the end point of the poll.

"Rates will remain unchanged until at least the first quarter of 2022," said Robert Boije, economist at mortgage bank SBAB.

He said that a rate hike before then could not be ruled out if the economy performed significantly better than expected, but that did not look likely.

The Riksbank sees economic growth in Sweden of 1.2% this year and 1.7% in 2021, according to its most recent forecast.

The December rate hike put the Riksbank out of synch with most major central banks, which have been easing policy or holding fire, awaiting clearer signs of where the global economy is heading.

But while the timing of the hike in December looked odd, few believed that negative rates were still needed in an economy that had been growing strongly for years and where inflation has been close to target.

The Riksbank has also been growing increasingly concerned about the possible downsides of negative rates, not least on the overheated housing market.

Having finally exited negative territory, the bank is now in "wait-and-see" mode.

The majority of analysts saw this as meaning no change to rates during the forecast period. However, one analyst expected a cut in the third quarter of this year, taking the repo rate back to -0.25%.

Two of 24 analysts expected a hike in the first quarter of 2021 with one of those seeing a further 25 basis point tightening in the third quarter of that year.

The Riksbank's forecast is for the benchmark rate to remain unchanged through 2021.

GRAPHIC: Sweden economy: http://fingfx.thomsonreuters.com/gfx/rngs/SWEDEN-ECONOMY/010021CD3B6/index.html

GRAPHIC: Riksbank rate, inflation and the Krona: http://fingfx.thomsonreuters.com/2011/09/29/1221225421.htm

(Reporting by Simon Johnson; Editing by Susan Fenton)

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