Swedish CB keeps key rate on hold, could still cut this year

Sweden's central bank held its key interest rate at 2.00 per cent as expected on Wednesday and said it still sees some probability of a further rate cut this year as it tries to balance above-target inflation with an economy running in low gear.

- 

The Swedish government on Wednesday raised its GDP growth forecast for 2026 to 3.0 per cent from 2.6 per cent seen in May while repeating a forecast of 0.9 per cent expansion in 2025.

“We are still in an economic downturn. At the same time, recovery is expected to get going during the autumn of 2025 and continue at a good pace next year,” the government said in a statement.

In 2024, GDP growth was 1.0 per cent.

“We, and many others expect, believe that the recovery will begin again at the end of this year and continue solidly through next year,” Finance Minister Elisabeth Svantesson said.

Headline inflation was 1.9 per cent in 2024 but has accelerated again this year. In July, it was 3.0 per cent.