Riksbank lowers repo rate by half point

Riksbank lowers repo rate by half point
The Riksbank decided on Wednesday to cut Sweden’s benchmark interest rate, the repo rate, by 0.50 percentage points to 4.25 percent as a part of a coordinated effort by several central banks.

In addition to the Riksbank, the Bank of Canada, the Bank of England, the European Central Bank, the US Federal Reserve, and the Swiss National Bank all announced they would be lowering interest rates.

“Inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices,” the banks said in a joint statement.

“The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability.”

The Riksbank added that is believed Sweden’s economy was slowing down and inflationary pressures were dampening as a result of the financial crisis.

“The labour market is also showing clearer signs of weakening. The downturn in economic activity and lower oil and other commodity prices indicate that inflationary pressures will be lower in the future,” said the Riksbank.

“The fact that the cut is a joint action together with other central banks increases confidence and the likelihood that it will have positive effects.”

The Riksbank said it will offer more detailed analyses and forecasts following its next scheduled monetary policy meeting on October 22nd.