Sweden's Central Bank Signals Potential Rate Cuts Amid Favorable Inflation Trends

Sweden's central bank, the Riksbank, held its key interest rate steady at 3.75% and indicated that if inflation continues to develop favorably, the policy rate could be cut two or three times later this year. This follows a previous rate cut in May, the first in eight years.

Sweden's central bank held its key interest rate at 3.75% as expected on Thursday and said if inflation prospects remain the same, the policy rate can be cut two or three times during the second half of the year.

In May, when it cut the policy rate for the first time in eight years, the Riksbank had said it expected two more cuts in 2024. "Given that inflation is fundamentally developing favourably, economic activity is assessed to be somewhat weaker, and the krona exchange rate is a little stronger, the forecast for the policy rate has been adjusted down somewhat," the Riksbank said in a statement.

"If inflation prospects remain the same, the policy rate can be cut two or three times during the second half of the year."