The Riksbank cuts rates for third time this year in September

The Riksbank surprises markets and reduces rates to three-year low: At its meeting on 22 September, the Riksbank resumed its loosening cycle, cutting its policy rate by 25 basis points to 1.75%. September’s reduction was the third this year, largely took markets by surprise—a hold had been anticipated—and left rates at a three-year low.

Core inflation moderated and the need to support growth takes center stage: The rate cut by the Riksbank was driven by a decline in inflation excluding energy prices, suggesting that still-high price pressures might be transitory. Additionally, the Bank noted that economic growth has now been weak for “a long time” and that there is a need to support economic recovery. Moreover, the recovery in the labor market is taking longer than anticipated.

Loosening cycle seemingly reaches the end of the road: The Riksbank’s forward guidance indicated that it expects to keep its policy rate at 1.75% for some time—the Bank’s rate path doesn’t foresee new reductions until 2028. The Bank will reconvene on 4 November, with the policy decision announced the following day. Our panelists are currently adjusting their forecasts following the surprise rate reduction.

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Swedish interest rate projections for the next ten years from a panel of 16 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Swedish interest rate.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Swedish interest rate projections.

Want to get access to the full dataset of Swedish interest rate forecasts? Send an email to info@focus-economics.com.