The Riksbank’s executive board wants to guide the market regarding its continued interest rate cuts.
The Riksbank lowers the key interest rate by 0.25 percentage points to 3.25 percent. The new interest rate comes into effect on 2 October.
With Wednesday’s announcement, the Governor of the Riksbank continues Erik Thedéen and the executive board the cautious downward adjustment of the policy rate to meet a recession that is no longer plagued by high inflation.
– Today’s announcement was perhaps the most anticipated reduction of 25 points ever, because the Riksbank’s executive board has shown that it is unwilling to make faster reductions than announced and has said that it would most likely be 25 points this time, says the Chief Economist of the Companies Johan Grip.
Expansionary monetary policy awaits
The next monetary policy announcement will be made on 7 November. Another announcement will be made on 19 December. The Riksbank has opened the possibility that a reduction of 0.5 percentage points may be relevant at one of the next announcements. Nor does it rule out one or two further reductions in the first half of 2025.
– Given that the Executive Board wants to guide the market regarding their continued interest rate cuts, it is welcome that they now say that they can lower the interest rate significantly by 50 basis points around the autumn, this, together with continued interest rate cuts, is needed to kick-start household demand and keep inflation at the target of around 2 percent , says Johan Grip.
