Sweden's Riksbank trims interest rates

Riksbank cut its key interest rate by 25 basis points to 3.25%, in line with analyst forecasts. It is the third time the central bank has reduced the cost of borrowing this year.

With inflation well off historic highs, central banks around the world are starting to reduced rates once again.

Headline inflation in Sweden, which peaked at more than 10% in 2022, was 1.2% in September, below Riksbank’s 2% target. It has now been under target for three consecutive months.

However, central banks are divided over how quickly to cut interest rates. The Bank of England has adopted a cautious approach, trimming rates by just 25bps so far this year.

In contrast, the US Federal Reserve announced a 50bps cut this month - its first cut in more than four years - and signalled more reductions will follow.

Riksbank also pointed towards further cuts, noting on Wednesday: "If the outlook for inflation and economic activity remains unchanged, the policy rate may also be cut at the two remaining monetary policy meetings this year.

"A cut of 0.5 percentage points is possible at one of these meetings. Moreover, the forecast indicates one or two further rate cuts during the first half of 2025.

"The policy rate is thus expected to be cut at a clearly faster pace than was previously communicated, which contributes to stronger economic activity and an inflation rate close to the target."