Riksbank can cut interest rate in December if inflation stable, governor Thedeen says
Adds detail in paragraphs 5 and 7
STOCKHOLM, Nov 22 (Reuters) -If the outlook for inflation and economic activity in Sweden remains constant, the Riksbank can continue to cut the policy rate in December and during the first half of 2025, Central Bank Governor Erik Thedeen said in a speech on Friday.
"At the moment, falling energy prices are pushing inflation below the target. We believe that this is a temporary effect and that inflation will stabilise at around 2 per cent in the future," Thedeen said in the written summary of a speech.
"But if the conditions change, this may justify a higher or lower interest rate in the period ahead," he added.
The Riksbank cut to 2.75% from 3.25% as expected on Nov. 7 saying there was a risk inflation could undershoot the 2% target unless the economy picked up speed.
The geopolitical situation, however, is very unsettled and the Riksbank has warned that rates could end up being higher or lower than expected.
It expects to cut rates in December and once or twice in the first half of 2025.
The pace of inflation - which peaked at over 10% in late 2022 - has dipped well below the central bank's 2% target, while the Swedish economy has stalled and is showing little sign of recovery in the short term.
Reporting by Louise Rasmussen, editing by Stine Jacobsen
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