STOCKHOLM (Reuters) – Sweden’s central bank cut its key policy rate to 2.25% from 2.50% as expected on Wednesday to boost sluggish economic growth and said its forecast for interest rates held though it stood ready to act if the outlook for prices and activity changed.
It was the Riksbank’s fifth rate cut in a row and the sixth since May last year.
“Given that the risk of inflation becoming too high is limited, at the same time as economic activity is weak … it is appropriate to cut the policy rate now,” the Riksbank said in a statement.
At its meeting in December, the Riksbank had said it expected to cut only once more in this cycle, sometime in the first half of this year.
The Riksbank has slashed rates over the last year nearly as fast as it hiked them when the global bout of inflation hit after the pandemic and Russia’s invasion of Ukraine.
After peaking at 4% percent, the central bank has now eased policy six times since the spring of 2024 as a result of its growing confidence that inflation, which topped 10% in late 2022, is under control.
Rate-setters are now focused on the economy, which has barely grown in the last couple of years.
The Riksbank expects growth to pick up again this year, not least because of rate cuts, but the outlook is uncertain and rate-setter said they were prepared to act if the outlook changed.
“There is particular uncertainty regarding developments abroad, for instance with regard to economic policy in the United States and Europe and the geopolitical tensions,” it said. “There are also risks linked to the recovery in the Swedish economy and the krona exchange rate.”
(Reporting by Terje Solsvik, Anna Ringstrom, Niklas Pollard and Simon Johnson; Editing by Niklas Pollard)
