Sweden’s chief interest rate, the repo rate, is cut to 1.50 per cent from 1.75 per cent. This the Riksbank announced on Thursday morning.
“Sluggish growth in the euro area has subdued the demand for Swedish exports, which slowed down significantly in late 2011. The weaker economic outlook has led the households to begin saving more and to postpone their consumption, while the companies are postponing their investment. GDP growth in Sweden will therefore be low in the period immediately ahead,” the Riksbank writes in a press release.
The growth forecasts is lowered for this year to 0.7 per cent and for next year to 2.1 per cent. Inflation this year is expected to reach 1.4 per cent and 1.9 per cent in 2013 and unemployment is expected to rise to 7.7 per cent.
“The weak demand in the Swedish economy and abroad will help to keep inflationary pressures low in the years ahead,” writes the Riksbank.
The Riksbank also lowers the interest rate path, that is its own forecast for the repo rate. The rate is expected to remain at 1.50 per cent well into next year.
