Sweden Central Bank Cuts Interest Rate; Signals More Easing
2024-09-19
3003
(fxcue news) - Sweden's central bank reduced its benchmark rate by a quarter point on Wednesday and hinted at two more cuts this year as policymakers focus on economic activity.
The executive board of Riksbank reduced the policy rate by 25 basis points to 3.25 percent. This was the third reduction this year.
Suggesting additional easing, the bank said the policy rate may also be cut at the two remaining policy meetings this year, if the outlook for inflation and economic activity remains unchanged.
A cut of 50 basis points is possible at one of these meetings, the bank said. Further, the forecast indicates one or two further rate reductions during the first half of 2025.
"Together, these changes imply a relatively large shift of monetary policy in a more expansionary direction, which will improve households' finances and make it easier for companies to invest," the bank said.
Policymakers observed that inflationary pressures have fallen and it is assessed to be compatible with an inflation rate of around 2 percent. Nonetheless, the outlook for inflation is uncertain.
Low and stable inflation and falling interest rates are expected to contribute to stronger economic activity next year, the bank added.
ING economists said the Riksbank will likely cut by at least 50 basis points across the final two meetings of the year. As Sweden has got a head start on the easing cycle, it is likely to reach its terminal rate of 2-2.5 percent much earlier than most, they said.
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