Sweden's central bank recently announced a significant cut in its key interest rate, reducing it by half a percentage point to 2.75%. This move marks the largest rate reduction in over a decade and is the fourth cut made by Riksbanken this year. The decision was made in an effort to provide additional support to the economy and help stabilize inflation at the target rate.
Riksbanken indicated that further rate cuts may be on the horizon if the economic outlook and inflation trends remain unchanged. There is a possibility of another rate cut in December and potentially during the first half of 2025. The central bank has been gradually easing its monetary policy throughout the year due to declining inflation and weak economic activity.
In October, Sweden's inflation rate stood at 1.6%, below the central bank's target of 2%. The seasonally adjusted unemployment rate was reported at 8.5% during the third quarter of 2024. The last interest rate cut in Sweden occurred in September, with a reduction of 0.25 percentage points.
Meanwhile, in Norway, the central bank opted to maintain its policy rate at 4.5%. Norges Bank Governor Ida Wolden Bache stated that the rate is likely to remain unchanged until the end of 2024. The policy rate in Norway has been held at 4.5% since December 2023, contributing to cooling down the economy and curbing inflation.
Sweden, a member of the European Union that does not use the euro currency, and Norway, which is outside the EU, are closely monitoring economic indicators and adjusting their monetary policies to address current challenges and support sustainable growth.
