"Over the course of the year, inflation has fallen and inflationary pressures have stabilised in line with the [2 percent] target. At the same time, growth has been weak. The Riksbank has cut the policy rate gradually but at a rapid pace. Lower inflation and lower interest rates contribute to stronger purchasing power for households and support economic activity," said the central bank in a statement.
"The interest rate has been reduced rapidly and monetary policy affects the economy with a lag. This argues for a more tentative approach when monetary policy is formulated going forward," it said.
"There is particular uncertainty regarding developments abroad, for instance with regard to the geopolitical tensions, lack of clarity regarding trade policy and the governmental crises arising in Europe. There are also risks linked to the recovery in the Swedish economy and the krona exchange rate," it said.
"If bank interest rates are high, it's expensive to borrow money, which means people spend less on goods and services, ultimately slowing down economic growth. Lower interest rates encourage borrowing and spending, supporting economic recovery."
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