Interest rate lowered by this much

On Wednesday, the Riksbank announced the first interest rate decision of the year, which will take effect on February 5. The policy rate is lowered by 0.25 percentage points to 2.25 percent.

Since last year, the Riksbank has lowered the policy rate six times, from 4 percent to Wednesday’s 2.25 percent – but whether there will be further cuts from Riksbank Governor Erik Thedéen is unclear.

The National Institute of Economic Research’s forecast suggests three more cuts from the Riksbank to reach 1.5 percent. However, according to the newspaper Dagens industri, banks in Sweden are uncertain about such a scenario.

Handelsbanken predicts that the bottom has now been reached and that there will be no further cuts. Meanwhile, SBAB, Nordea, and Danske Bank assess that there will likely be further cuts down to 2.0 percent either in March or May, but that will be the limit.

Sven-Olov Daunfeldt, chief economist at the Confederation of Swedish Enterprise, welcomes the announcement from the Riksbank and also expresses the need for further cuts in the spring.

– A lower interest rate is necessary in today’s uncertain economic situation with weak growth and high unemployment. However, the primary responsibility lies with the government. Increased focus on growth is needed to build a competitive economy with higher prosperity, says Daunfeldt to Expressen.