• Sweden's news in English

Riksbank lowers interest rate to 1 percent

18 Dec 2012, 09:32

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

Facebook Twitter Google+ reddit

"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

Facebook Twitter Google+ reddit

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
Here's how slow Sweden's high-speed trains are getting
A Swedish SJX2000 high speed train. Photo: Tomas Oneborg/SvD/TT

The high-speed rail journey between the three biggest Swedish cities is about to get longer.

The Local List
12 Swedish words with just awesome literal translations
A filthy-minded lobster, i.e. a snuskhummer. Photo: Gorm Kallestad/NTB scanpix/TT

One of our favourite things about the Swedish language is its wonderful compound words, which range from being utterly bizarre to making perfect sense.

US election
Donald Trump won't get new Ericsson head's vote
Trump pictured at a campaign rally in Florida. Photo: Evan Vucci/AP

The new Swedish-American boss of telecoms giant Ericsson has revealed he will not vote for the Republican nominee in the forthcoming US presidential election.

Swedes named fourth most gender equal in the world
A file photo of men and women pushing prams in Stockholm. Photo: Claudio Bresciani/TT

Sweden has closed 81 percent of its overall gender gap according to the World Economic Forum.

Sweden: Russian warships in the Baltic 'worrying'
Swedish Defence Minister Peter Hultqvist. Photo: Vilhelm Stokstad/TT

Two Russian warships equipped with long-range missiles have entered the Baltic Sea after passing Denmark.

Why businesses are worried about Sweden's drone ban
A drone filming in Stockholm. Photo: Pontus Lundahl/TT

The Local investigates what Sweden's new drone ban could mean for businesses in the country.

This is the new top boss of Swedish Ericsson
Börje Ekholm. Photo: Magnus Hjalmarson Neideman/SvD/TT

Telecoms giant Ericsson has appointed a new CEO after a turbulent year for the company.

These are Sweden's best universities: ranking
A new university ranking has been released. Photo: Cecilia Larsson Lantz/Imagebank.sweden.se

At least according to this global ranking, which picks 12 Swedish universities among the top-1000.

Swedish pharmacies restrict paracetamol sales for teens
The move is intended to cut paracetamol overdoses. Photo: Nora Lorek/TT

Sweden's pharmacies are banning teens under 18 from buying more than one pack of pills at a time.

Rwandan genocide suspect held in Sweden
A memorial centre in Kigali, Rwanda. Photo: Ben Curtis/AP

A man has been arrested in Sweden suspected of involvement in the 1994 Rwandan genocide which claimed 800,000 lives.

Sponsored Article
Stockholm: creating solutions to global challenges
Sweden cuts 2016 refugee forecast
Sponsored Article
Last chance to vote absentee in the US elections
Is Game of Thrones coming to Sweden?
Property of the week: Kungsholmen, Stockholm
Blog updates

6 October

10 useful hjälpverb (The Swedish Teacher) »

"Hej! I think the so-called “hjalpverb” (auxiliary verbs in English) are a good way to get…" READ »


8 July

Editor’s blog, July 8th (The Local Sweden) »

"Hej readers, It has, as always, been a bizarre, serious and hilarious week in Sweden. You…" READ »

Sponsored Article
This is Malmö: Football capital of Sweden
Will Swedes soon be looking for fairtrade porn?
Sponsored Article
Where is the Swedish music industry heading?
The Local Voices
'I simply don’t believe in nationality'
Why we're convinced Game of Thrones is based on Sweden
People-watching: October 21st-23rd
Sponsored Article
Why you should 'grab a chair' on Stockholm's tech scene
Fury at plans that 'threaten the IB's survival' in Sweden
Sponsored Article
Swedish for programmers: 'It changed my life'
Analysis & Opinion
Are we just going to let half the country die?
Angry elk chases Swede up a lamp post
Sponsored Article
Top 7 tips to help you learn Swedish
The Local Voices
'Alienation in Sweden feels better: I find myself a stranger among scores of aliens'
Sponsored Article
‘Extremism can't be defeated on the battlefield alone’
People-watching: October 20th
The Local Voices
A layover at Qatar airport brought this Swedish-Kenyan couple together - now they're heading for marriage
Sponsored Article
Stockholm: creating solutions to global challenges
Swede punches clown that scared his grandmother
Sponsored Article
Why you should 'grab a chair' on Stockholm's tech scene
Fans throw flares and enter pitch in Swedish football riot
Sponsored Article
Where is the Swedish music industry heading?
Could Swedish blood test solve 'Making a Murderer'?
Sponsored Article
One expat's strategy for making friends in Stockholm
Swedish school to build gender neutral changing room
Sponsored Article
Nordic fashion in focus at Stockholm University
People-watching: October 14th-16th
Man in Sweden assaulted by clowns with broken bottle
Nobel Prize 2016: Literature
Watch the man who discovered Bob Dylan react to his Nobel Prize win
Record numbers emigrating from Sweden
People-watching: October 12th
The Local Voices
'Swedish startups should embrace newcomers' talents - there's nothing to fear'
How far right are the Sweden Democrats?
Property of the week: Triangeln, Malmö
The Local Voices
Syria's White Helmets: The Nobel Peace Prize would have meant a lot, but pulling a child from rubble is the greatest reward
jobs available