(Bloomberg) -- Sweden's Riksbank lowered its benchmark interest rate by 25 basis points and signaled its easing campaign is likely to be wrapping up with one cut left to deploy.
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The central bank in Stockholm cut its rate to a two-year low of 2.5%, according to a statement on Thursday. Just one in 18 economists surveyed by Bloomberg expected unchanged rates, with all others predicting the move lower.
"If the outlook remains unchanged, the policy rate may be cut once again during the first half of 2025," officials said in the statement, adding they will "carefully evaluate the need for future interest rate adjustments."
Thursday's reduction, the fifth in its easing campaign intended to restart growth in the biggest Nordic economy, followed a half-point cut last month. It was in line with earlier messaging from the Riksbank, which had said in November that further easing was possible in December and in 2025.
The Swedish krona was little changed after the announcement, trading around 0.2% higher at 11.50 per euro. The krona has fallen more than 3% this year, pressured by a weakening economy.
Having brought inflation under control, the Riksbank has turned its gaze on the Swedish economy, a laggard for three years. Output has yet to recover even as interest rates have abated from levels that had previously been seen before the financial crisis and some board members have expressed concerns inflation might even cement itself at too-low levels.
The Swedish economy is very rate-sensitive, as many households hold mortgages fixed on short terms. The two-year tightening campaign that started in 2022 saw interest rates reach as high as 4% in 2023, significantly denting both consumer and industry confidence.
"The press statement and the rate path are on the hawkish side of expectations as the trough remains at 2.25%," Claes Mahlen, chief strategist at Svenska Handelsbanken AB, said in a note. The wording in the statement is "not opening up for a move below 2.25%," he said.
At the other side of the Riksbank's scale is the weakness of the Swedish krona, which sits near record lows versus both the US dollar and the euro. Its continued weakness may risk fueling inflation in the import and export-dependent economy, the largest in the Nordic region.
The Riksbank move comes amid a slew of other central bank rate decisions, with both the US Federal Reserve and European Central Bank opting to continue their rate-cut campaigns. Still, the Fed signaled a more cautious pace of easing next year after lowering its key rate for a third straight time on Wednesday.