Swedish Central Bank Cuts Policy Rate by Another 25 Basis Points

Forex - The Swedish Central Bank (Riksbank) has reduced the policy interest rate by an additional 25 basis points to provide more support to the economy and help stabilize inflation at target levels. According to the announcement from Riksbank, the benchmark interest rate has been lowered from 2.75% to 2.50%. Market expectations were also aligned with a 25 basis point reduction in the rate.

This signifies a total decrease of 150 basis points in the policy rate since May. The bank stated that if the outlook for inflation and economic activity remains unchanged, the policy rate could be lowered again in the first half of 2025.

Highlighting the rapid decrease in the interest rate and the delayed effect of monetary policy on the economy, Riksbank noted, “This indicates that a more cautious approach is required in formulating monetary policy going forward. Therefore, Riksbank will carefully assess the need for future interest rate adjustments in light of the impacts of prior cuts and changes in the risk profile concerning the outlook for inflation and economic activity. If the outlook remains unchanged, the policy rate may be lowered once again in the first half of 2025.”

The decision regarding the policy interest rate will take effect from January 8. The minutes of the Monetary Policy meeting held by the Board of Directors will be published on January 2.