On Wednesday, September 25th, the Swedish central bank announced a reduction of the benchmark interest rate by 25 basis points to 3.25%, marking the third rate cut by the Swedish central bank this year, which aligns with market expectations.

In an effort to stimulate the sluggish economy, the Swedish central bank also indicated that it will lower interest rates by half a percentage point in November. Governor of the Swedish central bank, Erik Thedeen, stated that the key for the central bank is to normalize interest rates in a "gradual but rapid" manner, and a 0.5 percentage point rate cut is in line with this approach. The Swedish central bank stated:

At the remaining two monetary policy meetings this year, the policy interest rate may also be reduced, and a 50 basis point rate cut is possible at one of these meetings. Therefore, it is expected that the policy interest rate will be lowered at a significantly faster pace than previously communicated.

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According to the latest guidance, both Bloomberg and analysts from Swedish banks predict that the Swedish central bank will cut interest rates by 50 basis points in November and by 25 basis points in December.

Analysts including Jesper Hansson forecast that by next March, the Swedish central bank's policy interest rate will be reduced to 2%, "which we believe is a normal level."

Following the release of the news, the euro's gain against the Swedish krona widened to 0.3%,报价 at 11.3196. As of now, the exchange rate is at 11.32 points.

The Swedish central bank has conducted rate cuts in both May and August this year—on May 8th, the Swedish central bank reduced the benchmark interest rate from 4.00% to 3.75%, and stated that if the inflation outlook remains unchanged, it is expected to cut rates twice more in the second half of the year. On August 20th, the Swedish central bank announced a reduction of the benchmark interest rate by 25 basis points to 3.5%, and implemented more easing policies than expected. At that time, the Swedish central bank stated: "If the inflation outlook remains unchanged, the policy interest rate can be reduced by two to three times this year."

Sweden May Accelerate the Pace of Rate Cuts

Sweden's economy has essentially been stagnant for nearly three years. According to official data, output contracted by 0.3% in the second quarter.As economic growth slows and unemployment rises, calls for interest rate cuts among Finnish residents continue to grow. The Swedish central bank has stated that their new guidelines should help address these challenges:

"These changes mean that monetary policy is shifting in a more expansionary direction, which will improve household finances and make it easier for companies to invest."

It is expected that by the end of this year and into 2025, Sweden's recovery will accelerate—earlier this month, Sweden announced expansionary budget proposals, including tax cuts and increased spending.

Furthermore, in recent months, the Swedish central bank has achieved its goal of keeping inflation around 2%, with inflation indicators even falling below this target. Kyle Chapman, a foreign exchange strategist at the Balyng Group, believes that the Swedish central bank needs more aggressive measures. He said:

"On the issue of inflation, the job is done—and even exceeded expectations. I think we face two 50 basis point rate cuts before the end of the year."