• 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
Sweden climbs global competitiveness ranking
The good news also came with some caveats. Photo: Izabelle Nordfjell/TT

The country moved up three places in the top ten of the latest edition of the World Economic Forum's Global Competitiveness Index.

Furious elk mum attacks Swede, breaks his arm
You talkin' to me? Photo: Mikael Fritzon/TT

It came back and attacked him not once, but twice.

Report: Stockholm is at risk of a housing bubble
Apartments in Stockholm. Photo: Tomas Oneborg/SvD/TT

Stockholmers are the third most likely to experience a housing bubble in their city, according to an international ranking.

The Local List
Reverse culture shock: the troubles of leaving Sweden
Does it get more Swedish than this? Photo: Emelie Asplund/imagebank.sweden.se

Why is that stranger talking to me in the elevator?!

Police close Facebook thread after call for help derails
A file photo of police cars on Gotland not related to the article. Photo: Henrik Montgomery/TT

The Gotland Police Facebook post asking the public for information about an unprovoked attack on two boys had to be closed because the comments section spiraled out of control.

US election
What Americans in Sweden think of Trump and Clinton
The Local spoke to Americans in Sweden after the first US presidential debate. Photo: David Goldman/AP/TT

The Local spoke to four US voters based in Sweden about who they are planning on voting for in the November election, and it looks like it's complicated.

Presented by Emirates Center for Strategic Studies
‘Extremism can't be defeated on the battlefield alone’
File photo: sanjitbakshi/Flickr

As Sweden prepares to take a seat on UN Security Council next year, Abu Dhabi-based scholar and author Dr. Jamal Sanad al-Suwaidi argues for a greater UN role to fight extremist ideologies like those that fuel Isis and other terror groups.

Video
Why Swedes want Nasa to send a condom into space
Should a condom be sent into space? It's the burning question some Swedes have posed. Photo: Fredrik Sandberg/TT & Craig Rubadoux/AP

'We can't be sure what alien sex organs look like.'

Mum gives birth on toilet after being told to take paracetamol
File photo of a baby not related to the story. Photo: Christine Olsson/TT

A woman has described how she was told to take a painkiller when she phoned a hospital in Ystad, southern Sweden, in pain. Just moments later she gave birth to a baby in the toilet.

Indians in Sweden told to be wary of travel document scam
File photo of a man using a phone not related to the story. Photo: Fredrik Sandberg/TT

The Embassy of India in Stockholm has urged Indian citizens in Sweden to be wary of scammers who ask for money to fix fabricated errors in travel documents.

Sponsored Article
Expat finances in Sweden: the Common Reporting Standard
Analysis & Opinion
'If Sweden really wants startups, drop the red tape on migration'
Sponsored Article
Let's Talk: a personal Swedish language tutor in your pocket
Gallery
Property of the week: Gotland
National
Trump an 'embarrassment' Springsteen tells Sweden
Blog updates

27 September

Cutting your nose …. (The Diplomatic Dispatch) »

"Last week, Jeremy Browne, the Special Representative for the City of London, visited Sweden. Jeremy was…" READ »

 

7 September

Svensk or svenska? (The Swedish Teacher) »

"Hejsan! My inbox is full of questions :-). Here’s one about when to use “svensk” and…" READ »

 
 
 
Sponsored Article
‘I view the world in a different way now’
Gallery
People-watching: September 23rd-25th
Sponsored Article
'Creating a sense of home': Collective living in Stockholm
Politics
Russian Sweden Democrat aide resigns over suspect deal
National
Muslim teacher leaves job after not shaking male colleague's hand
Travel
Why we adore autumn in Sweden
Sponsored Article
Life in Jordan: 'Undiscovered treasure'
Gallery
People-watching: September 21st
Sponsored Article
Gran Canaria: 'So much more than beaches'
National
Stockholmers hunt killer badger after attack on neighbourhood hipster cat
The Local Voices
Why this Russian developer is committed to helping refugees - with tech
Sponsored Article
Why Jordan is the ‘Different’ East
National
Six key points in Sweden's budget plan
Sponsored Article
How to vote absentee from abroad in the US elections
The Local Voices
How a Swedish name finally made recruiters notice this Iranian's CV
Gallery
Property of the week: Luleå
Sponsored Article
Why Jordan is the ‘Different’ East
Gallery
People-watching: September 16th-18th
Sponsored Article
Retiring abroad: ensuring your health is covered
Culture
Why Swedish TV has given these kids' trucks a sex swap
Sponsored Article
'There was no future for me in Turkey'
National
TIMELINE: Everything you need to know about the Julian Assange case
Sponsored Article
7 reasons you should join Sweden’s ’a-kassa’
Gallery
People-watching: September 14th
Sponsored Article
‘Extremism can't be defeated on the battlefield alone’
Politics
Why Sweden is putting troops on holiday dream island Gotland
The Local Voices
'What I mean when I say: I came here to blow myself up'
Society
VIDEO: Are Swedes that unfriendly?
Features
INTERVIEW: How Arthur the jungle dog opened hearts and minds
Gallery
Property of the week: Smögen, Västra Götaland
Society
Sweden's ancient forest tongue Elfdalian fights for survival
National
Where Sweden's foreigners are from
Gallery
People-watching: September 9th-11th
The Local Voices
'Whenever I apply for jobs I’m treated like an unwanted stranger'
The Local Voices
Is Swedish bosses' ignorance keeping refugees out of jobs?
2,961
jobs available