HELSINKI, Sept. 23 (Xinhua) -- Sweden's central bank on Tuesday lowered its policy rate by 0.25 percentage points to 1.75 percent, aiming to bolster economic recovery and bring inflation closer to its 2 percent target over the medium term.
The Riksbank said the global economy remains weighed down by geopolitical tensions, though overall growth prospects are largely unchanged. At home, headline inflation stayed elevated in August, but core inflation excluding energy aligned more closely with forecasts as the krona strengthened and companies moderated price increases.
"The conditions for stronger economic activity going forward remain, and there are some signs that they have improved recently," the bank noted.
"However, growth has been weak for a long time, and the timing of the expected recovery has been gradually pushed forward."
The bank indicated that if the outlook holds, the policy rate will remain at 1.75 percent "for some time." It flagged uncertainties around household savings, the effects of government tax cuts, and risks from global trade tensions and fiscal strains abroad. The new rate takes effect on Oct. 1.
Deputy Governor Anna Seim dissented, preferring to leave the rate unchanged for now while keeping the option of a cut later this year. She cautioned that supply-side vulnerabilities, combined with expansionary fiscal policy in 2026, could reignite inflationary pressures.
According to Statistics Sweden, the consumer price index (CPI) rose 1.1 percent year on year in August, up from 0.8 percent in July.
Inflation measured by the consumer price index with fixed interest rate reached 3.2 percent, compared with 3.0 percent in July. GDP expanded 0.5 percent quarter on quarter in the second quarter of 2025, and 1.4 percent year on year, supported by higher investment, exports, and household consumption. The unemployment rate stood at 8.7 percent in August. ■