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27/06/24
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Sweden’s Apex Bank Left Rate Unchanged
On June 27, the central bank of Sweden left its key interest rate unchanged at 3.75% as widely expected. Riksbank noted that there should be a gradual adjustment in monetary policy.
According to the apex bank, inflation prospects remaining the same may prompt the delivery of two or three rate cuts in H2 2024.
“Given that inflation is fundamentally developing favourably, economic activity is assessed to be somewhat weaker, and the krona exchange rate is a little stronger, the forecast for the policy rate has been adjusted down somewhat… If inflation prospects remain the same, the policy rate can be cut two or three times during the second half of the year,” said Riksbank.
However, the prospects for inflation and economic activity are uncertain. The apex bank considered some associated risks, including inflation abroad, geopolitical unease, the krona exchange rate and the recovery in the Swedish economy.
Its inflation outlook for this year has been reduced from 3.5 percent to 3.1 percent, as well as from 1.5 percent to 1.3 percent for next year. Conversely, its economic growth projection for 2024 increased steeply from 0.3 percent to 1.1 percent, but reduced its growth forecast for next year from 1.9 percent to 1.7 percent. Last month, Riksbank surprisingly delivered a 25-bps rate cut for the first time in eight years.
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