Sweden Cuts Policy Rate By 25 Bps

(RTTNews) - Sweden's central bank cut its benchmark interest rate by 25 basis points in order to support economic recovery and signaled an end to the easing cycle.

The executive board of the Riksbank decided to lower the policy rate by 25 basis points to 1.75 percent.

The bank has reduced the rate by 200 basis points since it started policy easing in May 2024.

"If the outlook for inflation and economic activity holds, the policy rate is expected to remain at this level for some time to come," the bank said in a statement.

However, the bank said the outlook for inflation and economic activity is uncertain, and there are factors that could lead to a different design of monetary policy going forward.

Policymakers observed that economic activity has been weak for a long time and the timing of the expected recovery has been gradually pushed forward. The turnaround on the labor market appears to be taking longer than expected, the board noted.

The economy is forecast to grow 0.9 percent in 2025, which was smaller than the previous outlook of 1.2 percent. Meanwhile, the outlook for 2026 was lifted to 2.7 percent from 2.4 percent.

Although inflation remained elevated in August, the board assessed that high inflation is transitory.

The bank upgraded its inflation forecast for this year to 0.8 percent from 0.7 percent, while that for 2026 was lowered to 0.9 percent from 1.6 percent.