In a surprise move, Sweden’s central bank has cut its key interest rate to 3.25% as inflation falls below target. The Riksbank stated that inflationary pressures have decreased over the year and are now in line with their target of around 2 per cent. This has led to the decision to lower borrowing costs in order to stimulate economic recovery.
The Consumer Price Index with a Fixed Interest Rate (CPIF) in Sweden recorded a 1.2% inflation rate in August, a decrease from 1.7% in July. The Riksbank also indicated that further rate cuts may be on the horizon if inflation and economic activity do not improve. They hinted at potentially cutting rates by 0.5 percentage points in the near future, with additional cuts in the first half of 2025.
This unexpected move by the central bank reflects the current economic situation in Sweden, where low and stable inflation rates are driving the need for lower borrowing costs. As the country aims to boost its economy, these rate cuts may provide the necessary stimulus for growth and recovery. The Riksbank’s proactive measures demonstrate a commitment to supporting economic stability in the face of challenging global economic conditions.
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