"I have considered a reduction of 0.50 percentage points at today's meeting to provide further support to the economy", said Vice Governor Anna Breman according to a protocol from the interest rate meeting on December 18.
"But I support a reduction of 0.25 percentage points as the positive effects of this year's rapid interest rate cuts are expected to have a greater impact on the economy next year", she added.
Higher Real Incomes
Vice Governor Per Jansson simultaneously struck a distinctly optimistic tone about the development in 2025.
"Real incomes have already increased significantly as inflation has decreased. Next year, a significant strengthening of households' cash flows will occur when the Swedish Central Bank's interest rate cuts have a greater impact on households' interest payments and fiscal policy also contributes with, among other things, tax relief. Even the situation for companies will improve clearly", he said according to the protocol.
He added that he sees a need to decide on a reduction in January or March.
Governor Erik Thedéen emphasized in his contribution that one must now follow up on the effects of the interest rate cuts made in 2024.
"We need to evaluate and analyze how the Swedish economy responds to the interest rate cuts we have implemented, how the fiscal stimuli affect the economy and how the international economic conditions develop. The prerequisites are reasonably in place for a fairly strong recovery from 2025 and onwards, with good growth, falling unemployment and low, stable inflation", he said according to the protocol.
The Market Expects Two Cuts in 2025
The reduction of the repo rate by 0.25 percentage points to 2.50 percent was the fifth reduction in 2024 – down from the interest rate peak of 4.00 percent in May last year.
In its so-called interest rate path – the Board's own forecast for the repo rate going forward – the Swedish Central Bank opened up for a reduction of the repo rate by 0.25 percentage points during the spring of 2025.
The market and most analysts, however, expect two cuts to 2.00 percent during 2025.
The next interest rate decision will be made on January 29.
