STOCKHOLM (Reuters) -Sweden’s central bank cut its key interest rate by a quarter percentage point to 2.50% as expected on Thursday, but said it now saw reasons to be more cautious about cutting rates in early 2025.
Sweden’s economy has been treading water for the last two years after the Riksbank jacked up rates to fight surging inflation – which peaked at around 10% in late 2022.
With price pressures now tamed, the central bank started cutting rates again in May, but households and businesses remain wary about spending.
“If the outlook for inflation and economic activity remains unchanged, the policy rate may be cut once again during the first half of 2025,” the Riksbank said in a statement.
In November, when the central bank made a larger-than-usual half-percentage-point cut, rate-setters had said they expected to cut in December and that they could ease policy once or twice in the first half of 2025.
“The interest rate has been reduced rapidly and monetary policy affects the economy with a lag,” the Riksbank said. “This argues for a more tentative approach when monetary policy is formulated going forward.”
Analysts in a Reuters poll had been unanimous in seeing a quarter-point cut. They forecast two more cuts in the first half of next year with the policy rate stabilizing at 2.00%.
