The Swedish Central Bank is lowering the level of what the board considers a "neutral interest rate", i.e. a policy rate that neither stimulates nor restricts the economy.
"The long-term neutral interest rate, and thus the long-term normal policy rate, is likely to be between 1.5 and 3 percent. This is one percentage point lower than the interval published by the Swedish Central Bank in 2017," says Vice Governor Anna Seim according to a press release.
The statement is made in connection with a seminar at the Swedish Central Bank and the announcement comes after a period of debate about what constitutes a neutral interest rate.
The immediate effect of the Swedish Central Bank's lowering of what the board sees as a neutral interest rate is limited, according to Torbjörn Isaksson, an economist at the major bank Nordea.
According to Seim, there is still a general downward pressure on the neutral interest rate even after the lowering. However, this is counteracted, among other things, by increased investments in defense and green transition.
The Swedish Central Bank's policy rate of 2.75 percent is "very close" to a neutral interest rate, according to Seim.
