Sweden Eases into Economic Stability with Interest Rate Adjustments

Sweden's central bank has reduced its key interest rate to 2.50%, marking the fifth cut this year. This decision aligns with expectations and aims to stabilize the economy. Future cuts might occur if inflation and economic conditions remain stable. Analysts predict further reductions by mid-2025.

Sweden's central bank has taken decisive action to support the national economy by cutting its key interest rate by a quarter percentage point to 2.50%, as forecasted on Thursday. This marks the fifth rate cut by the Riksbank this year, reflecting a continued effort to bolster economic stability amid fluctuating conditions.

In a statement, the Riksbank indicated the possibility of another rate cut in the first half of 2025 if the inflation and economic forecasts remain consistent. The bank highlighted the need for a cautious approach to monetary policy, citing the delayed effects economic measures can have.

Analysts, surveyed in a Reuters poll, unanimously anticipated this quarter point reduction, and have predicted two additional cuts in the coming year, which would eventually stabilize the policy rate at 2.00%. Sweden's economy has been relatively stagnant following aggressive rate hikes intended to combat surging inflation, which peaked at around 10% in late 2022.

(With inputs from agencies.)