Swedish Central Bank Highlights Inflation Concerns Amid Rate Cut Talks

The risks that inflation may become too low going forward were in focus at last week's interest rate meeting, shows a protocol from the Swedish Central Banken. The members interpret the probability of an interest rate cut in the autumn somewhat differently and the uncertainty – regarding tariffs and the geopolitical development – remains.

» Published: June 25 2025

Swedish Central Bank Highlights Inflation Concerns Amid Rate Cut Talks
Photo: Henrik Montgomery/TT

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”The interest rate can be both higher and lower than in our forecast. However, it is more likely that the interest rate will be lowered once again than that it will be raised”, said Vice Governor of the Central Bank Anna Breman at the meeting according to the protocol.

”In turbulent times, it is important that monetary policy contributes to stability in the economy by maintaining confidence in the inflation target and contributing to a stronger economy”, he added.

According to Vice Governor of the Central Bank Per Jansson, the probability of an interest rate cut in the fall is 50-50 and he thinks the latest incoming statistics are difficult to interpret.

Colleague Aino Bunge urged some caution.

"I believe that there is still reason to act gradually and have some stability in monetary policy when the fluctuations in the development of events in the outside world are as large as they are right now", she said.

The Governor of the Central Bank Erik Thedéen was on the same track, according to the protocol:

”We are signaling today a certain probability that it may be justified to lower the interest rate further. But I want to emphasize that the signal should not be overinterpreted, given the uncertain situation”, he added.

At the meeting, the Central Bank's Board decided to lower the interest rate by 0.25 percentage points to 2.00 percent – which means that the interest rate has been halved from 4.00 percent in just over a year. The Board simultaneously opened the door to a certain probability of a further reduction this year.

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By TTEnglish edition by Sweden Herald, adapted for local and international readers

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