Sweden's Central Bank cuts interest rate for 3rd time this year
Date
9/25/2024 9:48:21 AM
(MENAFN) Sweden's Central bank announced its third policy rate cut of 2024 on Wednesday, reducing the rate by 25 basis points to 3.25 percent. The decision is part of a gradual easing process following a period of sustained rate hikes. In a press release, the bank stated that if the current outlook for inflation and economic activity remains stable, additional cuts could follow during the final two monetary policy meetings of the year. The bank also suggested that further rate reductions might occur in the first half of 2025, signaling a continued shift towards monetary easing.
The central bank has been lowering the policy rate incrementally from 4 percent over the past four monetary policy meetings. This follows a series of aggressive rate hikes that began in April 2022, when the rate stood at 0 percent. Over the subsequent months, the bank steadily raised it to 4 percent by September 2023, where it remained unchanged until March 2024. This shift from rate hikes to cuts reflects the changing economic landscape and a moderation in inflationary pressures that were previously driving the tightening cycle.
The bank noted that inflationary pressures in Sweden had eased throughout 2024, aligning with its target inflation rate of around 2 percent. The bank’s inflation expectations for the year stand at 2.7 percent, a sharp decline from last year's 8.5 percent. Looking ahead, the central bank forecasts inflation to drop further to 0.4 percent in 2025, before gradually rising to 1.7 percent by 2026 and stabilizing at 2 percent in 2027. These projections indicate that the central bank believes it is on track to meet its long-term inflation target, allowing for continued monetary easing.
The recent cuts in the policy rate are aimed at supporting economic activity while keeping inflation in check. The central bank’s approach reflects a balance between ensuring economic growth and maintaining price stability, as it navigates the challenges posed by a slower global economy and the aftermath of high inflation in recent years.
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