• Sweden's news in English
 
app_header_v3

Riksbank lowers interest rate to 1 percent

18 Dec 2012, 09:32

Published: 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.

Story continues below…

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
Ibrahimovic makes United debut in front of Swedes
Ibrahimovic endured a terrible Euro 2016. Photo: TT

”Everybody has been waiting for this,” says Mr Modesty.

Sweden to investigate citizens' sex lives
It has been 20 years since the last in-depth study of the sex habits of Swedes. Photo: Tammy McGary/Flickr

The Swedish government is to launch a major study of the sex lives of its citizens after reports that lovemaking is on the wane.

Russian 'terror suspect' held at Swedish airport walks free
File photo of Arlanda Airport. Photo: Johan Nilsson/TT

UPDATED: A 35-year-old man has been released from police custody after being arrested at Arlanda Airport in Stockholm on Friday morning.

Northern Dispatches
'Moving to northern Sweden was the best thing we've done'
Photo: FB

In his farewell column, The Local’s northern Sweden correspondent, Paul Connolly, looks back at his first four years in Sweden.

Bear family just hanging out on Swedish golf course
Not the bear cub in question. But isn't he cute? Photo: AP Photo/Alexander Zemlianichenko

A bear family has been roaming a Swedish golf course, and the best thing of all is that no one cares.

The Local investigates
What do we actually know about the violence in Malmö?
Police investigating an explosion in Malmö on Thursday. Photo: Johan Nilsson/TT

International media have presented a "distorted" view of a spate of Malmö shootings and an explosion, a senior police boss has told The Local.

The Local List
Reasons why Stockholm Pride is simply awesome
Photo: Annika af Klercker/TT.

Stockholm's Pride festival culminates on Saturday with a parade – and more than a few parties. Here's why we think it's pretty amazing.

Cashless Swedes sitting on old bills worth billions

Old Swedish bank notes worth 1.4 billion kronor are still circulating, according to the country’s central bank, despite them having been declared invalid a month ago.

Homes
In pictures: Why is Nordic design so hot right now?
Scandinavian design. Photo: House of Beatniks

Design agency Studio Esinam investigates together with Houzz.se why the world is falling in love with Nordic style.

Stockholm one of world's best places to live: magazine
Living the dream. Photo: Hasse Holmberg/TT

Stockholm is the tenth best city in the world to live in, reckons this British magazine.

Sponsored Article
Why Swiss hospitality graduates are in demand
National
Swedish cop makes arrest of the year
Sponsored Article
Five easy ways to travel more often
National
Anyone for a bite of 340-year-old shipwrecked stinky cheese?
Gallery
People-watching: July 27th
Blog updates

26 July

A summer of change; a summer of beauty (The Diplomatic Dispatch) »

"You would have had to try hard to miss the political upheavals in the UK after…" READ »

 

22 July

After the horror, carry on regardless (Globally Local) »

"This time last week, we were just digesting the horror of the Nice killings, in which…" READ »

 
 
 
Sponsored Article
Why you need a EuroBonus American Express Card
Politics
Why Sweden's high taxes are not as high as you think
Sponsored Article
What can newcomers learn about Sweden at Almedalen?
National
What's haggis in a condom doing on Swedish children's TV?
National
Meet the northern Swede who is the world's best mosquito killer
National
Sweden's Hollywood star Alicia Vikander puts her pen in the bottle
Sponsored Article
Gran Canaria: Where Swedes go to work (and play)
Gallery
People-watching: July 22nd-24th
Sponsored Article
Why you should attend an international job fair
The Local Voices
The Jewish Syrian who dreams of rebuilding his country
National
Watch this Swedish weather host leave his fly open... on live TV
Sponsored Article
Why expats choose international health insurance
The Local Voices
'I fled war in Syria. I never expected to be beaten in Sweden'
Sponsored Article
'Sweden's Lauryn Hill' touches the country's musical soul
National
WATCH: Asylum seeker brutally beaten by Swedish bus driver
Technology
Why everyone is talking about Sweden's GTA pride parade
Sponsored Article
Five things Americans should know about voting abroad
National
EU hits truck cartel with record price fixing fine
Sponsored Article
Local guide: the best of Berlin
Society
OPINION: Why Sweden is the most extreme country in the world
The Local Voices
'There is equality in accommodation in Sweden: Everyone is suffering'
Gallery
Property of the week: Gräsö, Östhammar
Gallery
People-watching: July 15th-17th
National
How to make sure you're not caught out by Sweden's old bank notes
Business & Money
Why Sweden has been named the most innovative country in Europe
National
Terror attack: what should you do?
National
French expat on the moment he was assaulted by a Stockholm bouncer
Technology
Gunman? Nah, smartphone Swede
The Local Voices
'If the war in Syria ended today, would you go back?'
The Local Voices
‘I feel like I’m living in a grave!’
Gallery
IN PICTURES: Sweden's Princess Victoria celebrates 39th birthday
Gallery
People-watching: July 13th
National
Swedes discover surprise mountain
The Local Voices
'Even xenophobic Swedes can be polite’
The Local Voices
'The best time to be smuggled to Europe is August 20th, 2015'
The Local Voices
Swedes: Stop obsessing over your material life and start talking to strangers
3,391
jobs available