Sweden's central bank has today cut its key interest rate to 3.25% from 3.5% as expected and said that if the outlook for inflation remained favourable it could ease policy at a faster pace in the months ahead.
Analysts had unanimously predicted a cut of a quarter percentage point of the Riksbank's policy rate at its September meeting.
"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," the Riksbank said in a statement.
"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."
Headline inflation has continued to ease from a peak of above 10% in 2022, coming in at 1.2% in September - below both the Riksbank's forecast and its 2% target. It was the third time in a row with inflation below target.
The central bank has cut rates twice this year - in May, its first easing in eight years, and again in August. It said last month that it could make up to three more cuts before the end of the year as price pressures eased.
The Swedish crown was broadly unchanged after the decision.
Sweden's economy has slowed with manufacturers, households and the construction sector all weakening in the second quarter, signalling a need for rate cuts to rekindle growth not withstanding government moves too ramp up fiscal stimulus.
"Rate cuts by global central banks, including the double cut by the Fed last week make it easier for the Riksbank to continue with cuts," Lars Kristian Feste, Head of Fixed Income at Lannebo Funds said.
