Swedish Central Bank Holds Rate Steady, Signals Potential Future Cuts
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Loading... - Frieda Winter
- 28 Jun 2024
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Sweden's central bank, Riksbank, maintained its interest rate at 3.75% yesterday, following its first rate cut in eight years in May. The bank indicated that further reductions might occur later this year if inflation continues its downward trajectory.
Riksbank justified its decision to keep rates unchanged, stating that monetary policy "should be adjusted gradually." The central bank highlighted the current weakness in economic activity and noted that inflation is approaching its target of 2%.
"If inflation prospects remain the same, the policy rate can be cut two or three times during the second half of the year," Riksbank stated. Last month, the bank's preferred inflation measure, the Consumer Price Index with fixed interest rates (CPIF), was reported at 2.3%.
Jack Allen-Reynolds, an economist at the London-based research firm Capital Economics, remarked, "The Riksbank’s decision to leave rates unchanged was as expected and does not suggest that policymakers are regretting their decision to cut in May." He further predicted that the bank would implement three rate cuts this year.
As Riksbank continues to monitor inflation and economic activity closely, the potential for additional rate adjustments remains on the horizon, aimed at steering the economy towards stability and growth.
