SwedenLivingWorld world_2_fill WorldBusiness BusinessSports sports-soccer SportsEntertainmentEntertain

More rate cuts - but risk of turmoil with Trump

The Swedish Central Bank lowers the repo rate by 0.50 percentage points to 2.75 percent, the largest decrease in ten years. But what will happen to the interest rate in the future has become more uncertain after Donald Trump's election victory. The Governor of the Swedish Central Bank, Erik Thedéen, warns of a turbulent situation.

» Published: November 07 2024

More rate cuts - but risk of turmoil with Trump
Photo: Anders Humlebo

The reduction – twice as large as normal interest rate adjustments – was expected by both the market and most analysts. Unexpectedly slow growth motivates the decision, according to Erik Thedéen.

It seems that both households and companies are holding on to their wallets a bit tighter. Then we mean that it is motivated to stimulate, he says to TT.

This will improve households' economy and facilitate companies' investments, he adds.

Uncertainty has increased

The Swedish Central Bank also confirms its interest rate path, which points to two reductions down to 2.25 percent by the summer of 2025. But uncertainty has increased, according to Thedéen.

It is because the economic policy could potentially be radically changed in the world's largest economy. Then we must take that into account as a rather significant uncertainty, says Thedéen.

It is primarily Trump's threats of heavy tariffs, 10-20 percent against countries like Sweden, that risk causing trouble according to Thedéen.

In the short term, the tariffs and potential countermeasures from other countries – a so-called trade war – pose a risk of higher inflation and lower growth.

How that then plays out in an inflation path and monetary policy is too early to say. It will become a rather messy situation next year, one can imagine. Then we will simply have to analyze it, says Thedéen.

Strong pressure down on the krona

The krona has been strongly pressured down against the dollar ahead of the US election, down by around 70 öre. The Swedish currency has also lost against the euro.

A weaker krona is normally an inflation impulse for the Swedish economy, via higher import prices. But since demand is so low right now, the impact does not seem to be that great, according to Thedéen.

Then we believe and hope that this is temporary, he says about the exchange rate.

After the repo rate peaked at 4 percent, the Swedish Central Bank has, with Thursday's so-called double reduction, lowered the repo rate by a total of 1.25 percentage points within a period of about six months.

We think that is fast and gradual, says Thedéen.

Tags

TTT
By TTThis article has been altered and translated by Sweden Herald

More news

UK Finance Minister Plans to Cut 10,000 Public Sector Jobs

UK Finance Minister Plans to Cut 10,000 Public Sector Jobs

Car Exports to USA Surge Ahead of New Tariff Threats

Car Exports to USA Surge Ahead of New Tariff Threats

Hitachi Energy Hires 50 Former Northvolt Workers Amid Expansion

Hitachi Energy Hires 50 Former Northvolt Workers Amid Expansion

China Weighs Export Limits to US Amid Trade Tensions

China Weighs Export Limits to US Amid Trade Tensions

Musk's Political Moves Boost Support for Tesla Strike in Sweden

Musk's Political Moves Boost Support for Tesla Strike in Sweden

Trustee Confident in Northvolt Factory's Continued Operation Prospects

Trustee Confident in Northvolt Factory's Continued Operation Prospects

Support Hotline Launched for Businesses Impacted by Northvolt's Bankruptcy

Support Hotline Launched for Businesses Impacted by Northvolt's Bankruptcy

Union Rejection Puts Swedish Industrial Wage Talks at Risk

Union Rejection Puts Swedish Industrial Wage Talks at Risk

Nike Shares Dip 5.5% Amid Sales Concerns on NYSE

Nike Shares Dip 5.5% Amid Sales Concerns on NYSE

Trump and Bondi Warn Tesla Vandals of Severe Prison Sentences

Trump and Bondi Warn Tesla Vandals of Severe Prison Sentences

Snus Delivery Strike Looms as Union Holds Firm on Notice

Snus Delivery Strike Looms as Union Holds Firm on Notice

EU Investigates Star Stable for Allegedly Deceiving Kids Out of Money

EU Investigates Star Stable for Allegedly Deceiving Kids Out of Money

Russia Holds Steady on Interest Rate Amid High Inflation Concerns

Russia Holds Steady on Interest Rate Amid High Inflation Concerns

Social Democrats Criticize Increased ROT Deduction as Ineffective

Social Democrats Criticize Increased ROT Deduction as Ineffective

Sweden Unveils Updated Food Strategy to Boost Domestic Production

Sweden Unveils Updated Food Strategy to Boost Domestic Production

Sweden Boosts ROT Deduction to Stimulate Economy in May

Sweden Boosts ROT Deduction to Stimulate Economy in May

Telecom Stocks Defy Market Slump on Stockholm Exchange

Telecom Stocks Defy Market Slump on Stockholm Exchange

Germany's Major Loans Drive Up Interest Rates Across Europe

Germany's Major Loans Drive Up Interest Rates Across Europe

Asian Markets Diverge Amid Fed Signals and Trade Uncertainty

Asian Markets Diverge Amid Fed Signals and Trade Uncertainty

Sweden's Rent Hike Slows in 2025 but Remains a Struggle for Many

Sweden's Rent Hike Slows in 2025 but Remains a Struggle for Many

Heathrow Reopens with Limited Flights After Fire Disruption

Heathrow Reopens with Limited Flights After Fire Disruption

Akelius Foundation and Partners Raise 125 Million Kronor for Gaza Education

Akelius Foundation and Partners Raise 125 Million Kronor for Gaza Education

US to Impose Hefty Tariffs on April 2 in Trade War Escalation

US to Impose Hefty Tariffs on April 2 in Trade War Escalation

Snus Deliveries Secure as Strike Notice Withdrawn in Sweden

Snus Deliveries Secure as Strike Notice Withdrawn in Sweden

Navigating Mortgage Decisions Amid Economic Uncertainty

Navigating Mortgage Decisions Amid Economic Uncertainty

Svantesson Urges Shared Responsibility to Tackle Rising Food Prices

Svantesson Urges Shared Responsibility to Tackle Rising Food Prices

Swedish Food Giants Cite External Factors for Price Hikes Amid Tough Competition

Swedish Food Giants Cite External Factors for Price Hikes Amid Tough Competition

Interest Grows in Northvolt Assets Amid Bankruptcy Proceedings

Interest Grows in Northvolt Assets Amid Bankruptcy Proceedings

Tesla Recalls Cybertrucks, Market Dips Amid Fed Rate Hold

Tesla Recalls Cybertrucks, Market Dips Amid Fed Rate Hold

EU Delays Bourbon Tariffs, Seeks Talks with Trump Administration

EU Delays Bourbon Tariffs, Seeks Talks with Trump Administration

Bank of England Holds Interest Rate Steady Amid Inflation Concerns

Bank of England Holds Interest Rate Steady Amid Inflation Concerns

Geely's Profit Soars in 2024 with Strategic Shift and Sales Boost

Geely's Profit Soars in 2024 with Strategic Shift and Sales Boost

Coop Syd Cuts 160 Jobs Amid Ongoing Boycott in Sweden

Coop Syd Cuts 160 Jobs Amid Ongoing Boycott in Sweden

Mercedes CEO Calls for Zero Tariffs to Boost US-EU Trade

Mercedes CEO Calls for Zero Tariffs to Boost US-EU Trade

Switzerland Nears Zero Interest Rate as Central Bank Cuts Again

Switzerland Nears Zero Interest Rate as Central Bank Cuts Again

Swedish Central Bank Holds Steady on Interest Rates Amid Inflation Concerns

Swedish Central Bank Holds Steady on Interest Rates Amid Inflation Concerns

Swedish Central Bank Holds Rates Steady, Ready to Act on Inflation

Swedish Central Bank Holds Rates Steady, Ready to Act on Inflation

Ericsson Gains Amid Stockholm Stock Exchange Dip

Ericsson Gains Amid Stockholm Stock Exchange Dip

Sweden Tackles Rising Food Costs: Government Meets with Industry Leaders

Sweden Tackles Rising Food Costs: Government Meets with Industry Leaders

China Holds Steady on Interest Rates Amid Economic Challenges

China Holds Steady on Interest Rates Amid Economic Challenges