Sweden Interest Rate

The Swedish Riksbank cut its key policy rate by 25bps to 2.50% during its December meeting, confirming market expectations. This marks the fifth rate reduction this year, totaling 150bps, in response to persistently falling inflation and stabilizing inflationary pressures. This was reflected in November's headline inflation, which stood at 1.6%, the lowest level since July 2021, remaining below the central bank’s 2% target for the fourth consecutive month. At the same time, despite showing some recovery, economic activity remained weak. Meanwhile, policymakers noted that the rapid interest rate cuts are affecting the economy with a delay, warranting a cautious approach going forward. The Riksbank will assess the need for future rate adjustments based on the impact of prior cuts and shifts in inflation and economic risks. They added that if the outlook remains unchanged, further easing may occur in the first half of 2025.