The Central Bank of Sweden lowered the rate to 2.25% amid low inflation

Riksbank, the central bank of Sweden, lowered its key interest rate by 25 bps, which led to its reduction to 2.25% per annum. This step fully corresponded to the expectations of market participants.

This decrease was the third in a row in a series of meetings. During 2024, Riksbank has already reduced the rate by a total of 150 bps. In its statement, the regulator stressed the need for further easing of monetary policy, which is likely related to the current economic conditions.

In December, inflation in Sweden dropped to 0.8%, which was the lowest in the last four years. This level has remained below the 2% target for the fifth month in a row. It is expected that the data for January will be announced next week.  

Preliminary statistics presented on January 29 indicate that in the fourth quarter of 2024, Sweden's GDP showed an increase of 0.2% compared to the previous trimester and 1.1% y/y. For comparison, in the third quarter, growth was 0.3% and 0.7%, respectively. In addition, the volume of household loans in December showed an annual increase of 1.6%, which coincides with the same indicator in November.

In the foreign exchange market, the Swedish krona weakened by 0.1% against the dollar on Wednesday, reaching a rate of 11.0033 kroner per $1.