By Dominic Chopping
STOCKHOLM--Sweden's central bank held its key policy rate at 3.75% and said it could cut the policy rate two or three times during the second half as long as the outlook for inflation holds.
The decision was in line with a poll of economists by The Wall Street Journal ahead of the decision.
The Riksbank last month became the second central bank from a rich, advanced economy to begin its easing cycle following the post-pandemic surge in inflation, when it lowered its key interest rate for the first time in more than eight years to 3.75% from 4.0%. Switzerland's central bank was the first to move in March.
It said Thursday that inflation has continued to fall and is now close to the 2% target, while long-term inflation expectations signal strong confidence in the target, wage increases are moderate and economic activity is weak.
A worrisome macroeconomic backdrop argues for three cuts in the second half, said Bartosz Sawicki, market analyst at Conotoxia.
"The annual CPIF rate is now expected to fall to the 2% mark in 2024. This, combined with sluggish private consumption despite rapidly easing price pressures and a weak labour market, paves the way for a resumption of the rate-cutting cycle as early as the next meeting in August," he said.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
06-27-24 0412ET
