Riksbank Signal Another Rate Cut

(RTTNews) - Sweden's central bank lowered its policy rate on Wednesday, as expected, and signaled the probability of another reduction this year as inflation is expected to lower than earlier forecast and likely to stabilize around the target.

The Riksbank Executive Board, led by Governor Erik Thedéen, cut the policy rate by 0.25 percentage points to 2 percent. The bank kept the policy rate steady at 2.25 percent in March and May, following a quarter-point reduction in February.

"The forecast for the policy rate entails some probability of another cut this year," the bank said. "The lower interest rate will stabilize inflation at the target and contribute to strengthening economic activity."

The Riksbank observed that the economic recovery is proceeding more slowly than expected and the substantial uncertainty due to trade tariffs and geopolitical tensions, especially the ongoing Middle East conflict, is expected to hamper growth in the near term.

The bank said weaker demand is set to damp inflation going forward than in the most recent forecast.