Sweden cuts policy rate by 0.25 points to 3.5%

Sweden’s central bank, Riksbank announced on Tuesday a 0.25 percentage point cut in the policy rate, bringing it down to 3.5 per cent.

The decision reflects the continued decline in inflation and weak economic activity.

Inflation has been gradually in line with the 2 per cent target, with long-term expectations signalling strong confidence in this goal.

Wage increases have remained moderate, and various indicators, such as producer prices and company pricing plans, suggest that inflationary pressures are stabilising.

The Executive Board noted that the risk of inflation rising significantly has decreased, and new data since June indicates a weaker growth outlook both domestically and internationally.

Consequently, the policy rate may be reduced further, with potential cuts of two to three more times this year if the inflation outlook remains stable.

However, uncertainties persist, including geopolitical risks, economic activity fluctuations, and the krona exchange rate, which could impact inflation and monetary policy decisions.