Sweden Central Bank Trims Rate By 25 Bps
2025-01-26
3794
(fxcue news) - Sweden's central bank reduced its benchmark rate by a quarter-point on Wednesday to further support the economy and stabilize inflation at the target and also signaled that the easing cycle is coming to an end.
The Executive Board of Riksbank decided to cut the policy rate by 25 basis points to 2.5 percent. The outcome of the meeting widely matched expectations.
The policy rate has been reduced by a 1.5 percentage points since May.
"If the outlook for inflation and economic activity remains unchanged, the policy rate may be cut once again during the first half of 2025," the bank said.
Policymakers observed that the interest rate has been lowered rapidly and monetary policy affects the economy with a lag. This argues for a more tentative approach when monetary policy is formulated going forward, they noted.
The bank said it will carefully evaluate the need for future interest rate adjustments, in light of the effect of earlier cuts as well as shifts in the risk profile regarding the outlook for inflation and economic activity.
Today's rate cut will be the final reduction of this cycle, Capital Economics' economist Adrian Prettejohn said.
There will need to be deterioration in the outlook for the economy in order for policymakers to consider loosening policy further, the economist said.
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