Sweden's Central Bank Targets Growth with Interest Rate Cut

Sweden's central bank, the Riksbank, has reduced its key interest rate from 2.25% to 2.00%, citing mild inflationary pressures and a need to support a slowdown in economic growth. This move could pave the way for another rate cut later in the year if conditions remain favorable for easing.

Sweden's central bank, the Riksbank, has strategically reduced its key interest rate to 2.00% from 2.25% in a bid to stimulate economic growth amid mild inflationary pressures. This anticipated move provides room for potential further cuts, depending on future economic developments.

The Riksbank highlighted in its statement that the economic momentum initiated last year has weakened, leading to predictions of lower-than-expected inflation. There remains a possibility of another rate cut if conditions require additional stimulus.

The decision comes amidst lingering uncertainties over U.S. trade policies under President Donald Trump, which have dampened business and household sentiment in Sweden. Despite holding the policy rate steady in May, the Riksbank suggested it might consider more easing if inflation rates continue to underperform expectations, supported by a lackluster GDP growth projection for this year.

(With inputs from agencies.)