Chart of the day - EURSEK (29.01.2025)

• Riksbank lowers interest rate to 2.25% amid weak economic activity

Just moments ago, the Swedish Central Bank (Riksbank) announced its decision on interest rates. Riksbank lowered its interest rate by 0.25 percentage points to 2.25%, bringing the total monetary policy easing in the current cycle to 1.75 percentage points since May. The decision was in line with expectations. Swedish banks SEB and Swedbank anticipate at least one additional rate cut this year, potentially bringing the interest rate down to 2.0%.

Inflationary pressure aligns with the 2% target, while economic activity remains weak but shows signs of recovery. The bank maintained its December forecast but remains ready to adjust rates if inflation or growth dynamics change. The lower rate is expected to gradually boost demand, benefiting both households and businesses.

Bank Forecasts
Swedbank predicts GDP growth of 2% in 2025 and 3% in 2026, along with a rise in property prices of 5% and 7%, respectively. The bank expects household consumption to accelerate by summer, driven by lower interest rates, an increase in real wages, and tax reductions. Similarly, SEB anticipates a turnaround in 2025, dependent on improved household finances driving consumption.

Reaction on EURSEK

The announced decision met market expectations. Riksbank's statement also remained consistent with its previous forecasts. As a result, there was no significant reaction in the EURSEK exchange rate following the announcement. After a brief period of higher volatility, the exchange rate has returned to pre-announcement levels.

Source: xStation 5