The conditions are now conducive to stronger economic activity in Sweden, partly due to the increase in real household wages, although the recovery is slowing down, stated the organization in a release.
“New information shows that the growth of the Swedish economy is weak, while unemployment remains high. It is also expected that substantial uncertainty will hamper recovery in the short term,” the statement said.
The Riksbank considers it likely to reduce key interest rates again in 2025, following seven cuts in the past year.
“The outlook for inflation and economic activity is, however, uncertain. There are substantial risks related to trade policy and geopolitical tensions, notably due to the escalation of the conflict in the Middle East, which may impact economic developments abroad,” it explained.
These risks are exacerbated by doubts about the strength of domestic demand, added the Riksbank, whose decision to cut rates to 2% will take effect from June 25.
