For the first time since 2019 decrease The European Central Bank (ECB) its key interest rates.
A message that has a big impact on the Swedish Riksbank’s future decisions, says Frida Bratt, savings economist at Nordnet.
– The Riksbank simply cannot deviate too much from the ECB, she says.
Despite unexpectedly high inflation in May, the ECB cut its key interest rates by 0.25 percentage points on Thursday. The so-called deposit rate is now 3.75 percent.
And according to savings economist Frida Bratt, the interest rate announcement has great significance for the economy in Sweden.
– It is important for the Riksbank what the ECB does. If the ECB would not have lowered, at the same time as the Riksbank has now started its rate-cutting cycle, it could mean further weakening of the krona, which could trigger inflation again.
Awaited notification
The reduction is the first since 2019. According to Frida Bratt and several experts, the announcement was expected.
– Inflation has come down after a period of very rapid and strong inflation in Europe. Above all, as a result of sharply rising energy prices, she says.
– Now inflation is reasonably under control, and in order to prevent the European economy from taking too much of a beating, they choose to support the economy by lowering the interest rate.
“We can expect more interest rate cuts”
After the announcement, ECB President Christine Lagarde emphasized that inflation remains vigilant and that the ECB is prepared to keep interest rates high if necessary.
Despite that, it is clear that lower interest rates await, according to Frida Bratt.
– You don’t want the European economy to take more of a beating than necessary. We can expect more interest rate cuts from the ECB, as well as from the Riksbank. That is the direction we are heading, she says.