There are some signs that Swedish monetary policy may havereached its limits.

Over the past year, mortgage rates haven't budged andcorporate loan rates have seen only marginal declines. That'sdespite the Riksbank driving its main lending rate well below zeroand pushing through wave after wave of record bond purchases todrag down longer-term rates.

Policy is “already so extreme that we've already lost thatinterest rate sensitivity, and you will get very small effects onthe economy from more rate cuts,” said Robert Bergqvist, chiefeconomist at SEB, the Nordic region's biggest currency trader.Rates are unlikely to fall further because banks pass on negativerates to their corporate customers, he said.