The expected rate cut of 50 points was implemented, something the Swedish Central Bank has not done since 2014.
However, there were clear reasons according to Erik Thedéen:
The development has largely been in line with our forecasts. We think it's most reasonable to cut 50 points to get the economic recovery going, says Riksbank Governor Erik Thedéen at a press conference in Falun.
This will improve households' economy and facilitate investments for companies.
Cut by 1.25 percentage points
After the repo rate peaked at 4 percent, it has now been cut by 1.25 percentage points within a period of about six months. Thedéen describes the cuts as "rapid but gradual" while expecting further cuts, next at the December meeting and continued in the beginning of December.
The Swedish Central Bank emphasizes that the economic development is "difficult to assess" – not least after the presidential election in the USA.
— There are two things, one is trade barriers that can quickly and concretely affect Swedish companies. It could also affect inflation upwards.
— The other is that the security situation in Europe can deteriorate. Then I naturally think of Ukraine. It has obvious human consequences but can also have economic consequences.
A turnaround
Thedéen describes the USA as facing a kind of turnaround in economic policy, but notes that it's too early to say exactly what the change in the USA will entail in detail.
The immediate effect is that inflation can rise. Then it must be weighed against the possibility of getting a worse economic development, which could lower inflation. However, it would be unfortunate for a country like Sweden if we get caught in a trade war.
