Swedish central bank's Jansson: Inflation does not need to be exactly at target for us to dare to cut the interest rate one more time

Swedish central bank's Jansson: Inflation does not need to be exactly at target for us to dare to cut the interest rate one more time

In a recent statement, Swedish central bank chief Erik Thedeen expressed confidence that underlying inflation in Sweden is moving towards the 2% target, despite current elevated readings. Thedeen attributed the higher-than-expected inflation to temporary factors, such as the reweighting of the inflation basket at the beginning of the year [1].

The central bank has left the underlying interest rate unchanged at 2%, citing unexpectedly high inflation figures in June and July. However, it still sees a certain likelihood of a further rate reduction before the end of the year [2]. This stance suggests a cautious approach to monetary policy, as the bank aims to balance inflation control with economic growth.

The central bank's latest monetary policy report indicates that while inflation has risen more than expected over the summer, it is anticipated to fall back to 2% in the coming months. The recovery remains sluggish, but there are favorable conditions for stronger economic activity going forward [3].

The central bank's decision reflects its view that inflation does not need to be exactly at the target for them to consider a further interest rate cut. This strategy aims to support the economy while maintaining control over inflation.

References:
[1] https://www.investing.com/news/economic-indicators/swedish-central-bank-chief-says-inflation-heading-to-2-target-93CH-4201803
[2] https://www.facebook.com/100078057409156/posts/775124918432748/
[3] https://www.riksbank.se/en-gb/monetary-policy/monetary-policy-report/2025/monetary-policy-decision-august-2025/