Sweden's Riksbank Shifts to Caution: Interest Rate Moves and Economic Outlook

Sweden's central bank has cut its key interest rate to 2.50% but signals caution for 2025, adopting a measured approach after multiple rate cuts. With inflation below target but creeping up, further rate adjustments are contingent on economic conditions. The Swedish crown strengthened after the announcement.

Sweden's central bank, the Riksbank, has lowered its key interest rate by a quarter percentage point to 2.50%, aligning with expectations. After several rate cuts this year, the bank is now taking a cautious stance as it looks ahead to 2025, given recent economic developments.

Although inflation is currently below the 2% target, there has been a slight uptick, while household and business spending remains restrained. The Riksbank hints at a possible rate cut in the first half of 2025 if current inflation and economic trends persist.

This cautious message mirrors that of the U.S. Federal Reserve, which expects fewer rate cuts next year than previously anticipated. Following the Riksbank's announcement, the Swedish crown gained strength, reflecting confidence in the bank's measured approach.

(With inputs from agencies.)