StockholmcTypeface:> Sweden’s central bank lowered its policy rate for a fifth time this year, cutting it by 25 basis points in order to support the economy and signaled one last reduction in the first half of next year.
The executive board of the Riksbank, led by Governor Erik Thedéen, decided to cut the policy rate to 2.5% from 3% on Thursday. The outcome matched expectations. “The outlook for inflation and economic activity remains uncertain,” the bank said. “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. The central bank raised the consumer price index with a fixed interest rate (CPIF) inflation projection for next year to 2% from 1.6%. The GDP growth forecast for next year was trimmed to 1.8% from 1.9%. The Swedish central bank started its current easing cycle last May with a quarter-point reduction. The bank has slashed the rate by 150 basis points since May. The bank said that it will carefully evaluate the need for future interest rate adjustments, in light of the effect of earlier cuts and shifts in the risk profile regarding the outlook for inflation and economic activity. Although there are some signs that economic activity is on its way to recovery, it remains weak, the Riksbank noted. Capital Economics’ economist Adrian Prettejohn said the Riksbank is unlikely to cut the repo at its next meeting in January. Further ahead, the economist expects just one more quarter-point cut next year, in March, as the economy is likely to pick up soon, dissuading policymakers from too much more policy loosening. (dpa)
