Sweden cuts rates, Norway stands pat

Sweden's Risksbank cut interest rates by 50 basis points to 2.75%, as expected.

It said in a statement: "The Riksbank has gradually eased monetary policy over the course of the year, as inflation has declined and economic activity has remained weak. Despite an expectation among economic agents of better times ahead, there are still few clear signs of a recovery.

"To further support economic activity, the policy rate needs to be cut somewhat faster than was assessed in September. It is important in itself that economic activity strengthens, but it is also a necessary condition for inflation to stabilise close to the target."

The Swedish central bank said that if the outlook for inflation and economic activity remains unchanged, rates may need to be cut again at the next meeting in December and in the first half of 2025. That is in line with what was said in September.

Capital Economics said: "Given today’s bumper rate cut, we have lowered our terminal rate forecast by 25bp which brings it in line with the Riksbank’s forecast of 2.25%, and expect it to reach that level in January."

Meanwhile, Norges Bank announced that it was leaving rates on hold at a 16-year high of 4.5%, also as expected.

"The Committee judges that a restrictive monetary policy is still needed to bring inflation down to target within a reasonable time horizon," it said.

"The forecasts presented in the September Report indicated a gradual reduction in the policy rate from the first quarter of 2025. The outlook for the Norwegian economy does not appear to have changed materially since the previous monetary policy meeting."