It is best that Riksbanken makes good on its "promises"

The announcement that the Swedish central bank AKA Riksbanken is lowering the policy rate by 25 points is in line with their own forecast and the market's expectations. Riksbanken's approach may be a procedure to show itself strong towards the market and that they prioritize their trust in their own forecasts as opposed to what the Swedish economy actually needs. With this demonstration of strength, Riksbanken can take too lightly the new Riksbank Act, which states that they must also take real economic considerations into account.

Everything in the Swedish economy points to the fact that today's policy rate announcement should have been a double cut, which may give rise to harsh criticism of Riksbanken and its governor in the future, depending on how hard the Swedish economy is hit due to Riksbanken's gradual and cautious single policy rate cut.

However, the board's new policy rate forecast stands out. Quote "If inflation and the economic outlook hold, the policy rate may also be lowered at the two remaining monetary policy meetings this year. A reduction of 0.5 percentage points at one of these meetings may be relevant," unquote writes Riksbanken in a press release.

In addition, central bank governor Erik Thedéen is also open to further reductions into 2025. Quote "Furthermore, the forecast indicates one or two further rate cuts in the first half of 2025. The policy rate is thus expected to be lowered at a clearly faster rate than previously communicated, which contributes to a stronger economy and inflation close to the target." unquote. Riksbanken's new goal is for the policy rate to be 2.25%.