• Sweden edition
 
Riksbank lowers interest rate to 1 percent

Riksbank lowers interest rate to 1 percent

Published: 18 Dec 2012 09:32 GMT+01:00
Updated: 18 Dec 2012 09:32 GMT+01:00

"The weak developments in the euro area are clearly affecting the Swedish economy, which is now slowing down," the Riksbank said in a statement.

It also noted that Swedes are spending less money, wages are not expected to increase at their usual rate, and unemployment has risen, all combining to create "low inflationary pressure".

Sweden has a 2-percent inflation target.

"Swedish households and companies now have a more gloomy outlook, and consumption and investment are weak," the statement read.

The governing board, however, hopes that Tuesday's interest rate cut will keep Sweden on target inflation-wise all the way to 2014. It does not expect to alter the repo rate further during 2013.

Two of the bank's six governors, however, wanted an even heftier cut.

Karolina Ekholm wanted the Riksbank to cut the repo rate down to 0.75 percent in early 2013 and communicate its intentions to do so now.

Lars E.O. Svensson wanted a similar cut to be put in place immediately and not wait for the New Year.

There were also outside critics who said the Riksbank should have acted more decisively and more swiftly during 2012.

"There is a lot to support an argument that the interest rate we had negatively affected the economy and has contributed to unemployment," John Hassler, economics professor at Stockholm University, told TT.

Hassler does not think Tuesday's cut will have any great effect as most players in the market had already forecast the rate cut and made adjustments accordingly.

The Riksbank also lowered its forecast for Swedish economic growth in 2013 to 1.2 percent, down from the previous forecast of 1.8 percent. The bank expects economic growth to pick up in 2014, however, rising to 2.7 percent.

Unemployment, according to the Riksbank, is expected to rise to 8.1 percent next year, slightly higher than the bank's earlier forecast of 7.9 percent, before falling to 7.6 percent in 2014.

TT/The Local/at

Follow The Local on Twitter

Your comments about this article

23:17 December 25, 2012 by busby61
This is great to see how ever will the lower rates get passed on to clients as here in the UK banks and building societies are still charging rates of up 4.5% or more above base even after the goverment has told them that they must pass on the lower rates to clients.
Today's headlines
Opinion
'Sweden will see Russia as a threat again'

'Sweden will see Russia as a threat again'

The Local speaks to one of Europe's leading security experts about why social media meant the Swedish military couldn't keep their 'submarine' search a secret and how she believes the country will ramp up its security against Russia. READ  

National
Stockholm suicide bomb investigation closes
The suicide bombing took place in 2010. Photo: TT

Stockholm suicide bomb investigation closes

Sweden's Security Service (Säpo) has announced that it will stop its core investigation into a suicide bombing in Stockholm four years ago. READ  

Stockholm 'sub hunt'
Military heads into 'new phase' in sub search
The search for the missing 'submarine' is now in its sixth day. Photo: TT

Military heads into 'new phase' in sub search

UPDATED: A press conference on the search for a suspected foreign vessel in Swedish waters revealed that the Armed Forces would be heading into a new phase on Wednesday. READ  

Lifestyle
Vasa ship cannon blasted in Sweden
The bronze replica cannon. Photo: Beth Dacey.

Vasa ship cannon blasted in Sweden

A replica of one of the cannons present on Stockholm's iconic Vasa warship when it sank in 1628 is being tested for the first time in central Sweden. READ  

Health
Swedish farmers contracted swine flu
Swine flu can spread between pigs and humans. Photo: TT

Swedish farmers contracted swine flu

A human strain of the swine flu virus normally only found in pigs was discovered in Sweden earlier this year, the country's Public Health Agency has revealed. READ  

Stockholm 'sub hunt'
Sweden ready to use force to surface sub
Photo: TT

Sweden ready to use force to surface sub

Sweden's military says it has no plans to downsize the search for a possible foreign submarine and is prepared to force any suspect vessel to the surface of the sea, "with armed force if necessary". READ  

National
Chainsaw man destroys house in family feud
The man used a chainsaw to destroy most of the Lidköping home. Photo: Shutterstock

Chainsaw man destroys house in family feud

A man in central Sweden has gone on a rampage with a chainsaw after a family housing dispute took an unexpected turn. READ  

National
Man frames beggar with stolen tablet computer
The beggar was detained for almost 24 hours after the accusation. Photo: TT

Man frames beggar with stolen tablet computer

A man in southern Sweden has landed in hot water after he stole a tablet computer, gave it to a beggar, then reported her to the police. READ  

Stockholm 'sub hunt'
Sub hunt: 'There is something out there'
Former navy officer Bosse Linden in Vaxholm. Photo: Maddy Savage

Sub hunt: 'There is something out there'

Stockholm's archipelago is the focus of the biggest military operation in Sweden since the Cold War. The Local is in the region's capital, Vaxholm, to see what residents make of the drama. READ  

Presented by CurrencyFair
CurrencyFair: Why it pays when making overseas transfers
CurrencyFair co-founder Brett Meyers

CurrencyFair: Why it pays when making overseas transfers

Tired of losing money when you send cash back home? Join other expats in Sweden who avoid bank fees and hidden charges by sending money internationally with CurrencyFair, an online marketplace where secure transactions are faster and cheaper. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
National
Sub hunt: The story so far
National
Sub hunt: 'There is something out there'
National
Dentist gives free care to Roma beggars
Business & Money
Get your own office in Gothenburg or Stockholm - free for a day
Gallery
Property of the week: Malmö
Blog updates

21 October

Denna & den här (The Swedish Teacher) »

"?Denna? or ?den hr?? Swedish language students often ask question about different pronouns. One pronoun that especially..." READ »

 

19 October

Getting it (Blogweiser) »

"Follow Joel Sherwood on FB Few watch baseball in Sweden. This is excellent when your team loses..." READ »

 
 
 
Gallery
PHOTOS: 'Foreign activity' in Swedish waters
National
Sweden deploys troops over underwater threat
Gallery
People-watching: October 19th
TT
Society
QUIZ: How good is your Swedish?
National
A Touch of Scandinavia: Reindeer in the kitchen
Lifestyle
What's on in Sweden: October 17th - 24th
Society
The nudity... and nine other things expat men notice in Sweden
Gallery
People-watching: October 15th
Gallery
Your views: Should outdoor smoking be banned in Sweden?
Business & Money
Sweden has 'large hole' in finances
Sponsored Article
Introducing... Finding a job in Stockholm
Society
Monster salmon caught in northern Sweden
Gallery
Property of the week: Lorensberg
National
Scandinavia's child bride
National
Ebola crisis: How is Sweden preparing?
Lifestyle
Sweden's The Bridge to become 'more Danish'
Business & Money
How Sweden is becoming a cashless society
Gallery
Stockholm Burlesque Festival 2014
National
How a little red horse became a symbol for Sweden
Gallery
People-watching: October 12th
Business & Money
The hottest start-ups from southern Sweden
National
What's on in Sweden: October 10th - 17th
National
Stockholm is 'best' region for well-being
Gallery
People-watching: October 8th
National
Five facts to know about Patrick Modiano
Society
My Swedish Career: A French fashionista in Sweden
Society
Swede's anti-bully Facebook tale goes viral
Society
Have you seen Sweden's viral subway cancer campaign?
National
Isis: Swedes linked to Turkish prisoner swap
National
Should Swedes be banned from buying sex abroad?
Gallery
Fredrik Reinfeldt's leaving presents
National
Five Swedish TV shows you shouldn't miss
Gallery
A tool belt, a casserole, and a book. Fredrik Reinfeldt's parliament gifts
TT
Lifestyle
Top five winter festivals in Sweden
TT
National
Sami reindeer herders win mine reprieve
Gallery
Property of the Week: Gamla Enskede
Sponsored Article
How to catch the first lobster of the year
Politics
Ten new minister faces you should know
Tech
First womb transplant baby in world born in Sweden
Gallery
People-watching: October 5th
Team SCA
Sponsored Article
All-female SCA team takes off on Volvo Ocean Race
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

999
jobs available
Swedish Down Town Consulting & Productions
Swedish Down Town Consulting & Productions is an innovative business company which provides valuable assistance with the Swedish Authorities, Swedish language practice and general communications. Call 073-100 47 81 or visit:
www.swedishdowntown.com
PSD Media
PSD Media is marketing company that offers innovative solutions for online retailers. We provide modern solutions that help increase traffic and raise conversion. Visit our site at:
http://psdmedia.se
If you want to drink, that’s your business.
If you want to stop, we can help.

Learn more about English-language Alcoholics Anonymous in Sweden. No dues. No fees. Confidentiality assured.
AA-EUROPE.ORG/SWEDEN