The Swedish krona declined today after the nation’s central bank cut its main interest rate and lowered its growth forecast for 2012 as the negative developments in the eurozone hurt the country’s economy.
The Riksbank (Sweden’s central bank) lowered its main interest rate by 25 basis points to 1.50 percent. The central bank explained its reasons for decreasing the rate and hinted that more reductions are possible:
There is considerable uncertainty about economic development abroad. The public-finance problems in the euro area in particular may become more serious and have more negative effects on the Swedish economy. In this situation, the repo-rate path may need to be lower.
The bank also decreased its growth estimate for this year to 0.7 percent from the December forecast of 1.3 percent.
USD/SEK climbed from 6.7204 to 6.7705 as of 11:15 GMT today.
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