According to Jinshi, Swedish central bank deputy governor Jansson said that economic growth needs to be in line with expected inflation so that it does not fall far below the Swedish central bank's 2% target level. This suggests that correcting weak economic development may be one of the factors that prompted the Swedish central bank to cut interest rates beyond the main scenario.
“It’s important that the economy strengthens so that inflation stays around 2 percent, otherwise we could have problems in the other direction,” Jansson said at a Danske Bank event in Stockholm.
While Jansson is most likely to cut rates by 25 basis points at future meetings, the mention of a 50 basis point cut is an important signal, suggesting that a larger rate cut is still in line with the Riksbank's gradual easing policy.
