Sveriges Riksbank reduced its policy rate by 25 basis points to 3.50% on 20 August 2024, delivering its second cut of the year after a pause in June. The decision was published on the Riksbank's website following the executive board's meeting.
The August move followed a 25-basis-point reduction at the May 2024 meeting. The Riksbank had previously raised its policy rate to a peak of 4.00% before beginning to reverse course earlier in the year.
ECONOMIC OUTLOOK
The Executive Board said new information since June indicated a somewhat weaker growth outlook in Sweden and abroad, and that the policy rate could therefore be cut somewhat faster than it had assessed in June. The bank said inflation was approaching the target while economic activity remained weak.
Headline inflation in Sweden had fallen from the peaks reached in 2022 and 2023, with CPIF — the Riksbank's preferred measure — approaching levels consistent with the 2% target.
FURTHER CUTS SIGNALLED FOR REMAINDER OF YEAR
The Riksbank said that, if the inflation outlook remained the same, the policy rate could be cut two or three more times before the end of 2024. The bank said the outlook for inflation and economic activity was uncertain, citing risks linked to the geopolitical situation, economic activity in Sweden and abroad, and the krona exchange rate.