Swedish Central Bank Cuts Policy Rate by 50 Basis Points

Forex - The Swedish Central Bank (Riksbank) has lowered the policy interest rate by 50 basis points as expected; it stated that if the inflation and economic activity outlook remains unchanged, the policy rate is likely to continue to be reduced in December and in the first half of 2025.

According to the announcement from Riksbank, the benchmark interest rate was reduced from 3.25% to 2.75%. Market expectations were also aligned with a 50 basis point cut.

The statement noted, "If inflation and the economic outlook persist, the policy rate may continue to be lowered at the next monetary policy meeting in December and in the first half of 2025, in line with what was announced in September."

The statement further added, "Assessing economic developments is currently particularly challenging, especially in the external environment and at least until after the American elections. There are risks, among other things, related to geopolitical unrest, external economic policy, the krona, and the link between the Swedish economy's exchange rate, which could affect economic and inflation expectations and lead to a different monetary policy design."

The new interest rates will take effect from November 13th.