By Maximilian Clarke

Sweden’s central Riksbank has today decided to cut interest rates from 2% to 1.75% amidst pessimism about the eurozone debt crisis.

“The Riksbank’s decision to cut interest rates to 1.75% was no great surprise in the current economic environment,” commented Richard Driver, analyst for Caxton FX, before speculating further cuts in the future as stability in the beleaguered monetary union looks ever more distant.

“The Norges Bank, European Central Bank and the Reserve Bank of Australia have all cut rates this month to safeguard themselves from shockwaves out of the eurozone and you can expect more to follow suit in the New Year.

“Sweden is a very open economy and more vulnerable than most to a eurozone collapse as it relies heavily on export demand from the eurozone.

“The eurozone is heading into a recession and Swedish exports are going to be hit hard, so the Riksbank was right to act sooner rather than later.”

He added: “Growth is slowing in Sweden, inflation is not really an issue and another rate cut is likely to come in February.”


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