Swedish krona at 3 year low after surprise rate cut

Sweden’s Central Bank has shocked the markets by cutting interest
rates by far more than expected. It slashed its main rate by 50 basis
points to 0.25 percent. The Riksbank took the decision to deal with
fears of deflation. It’s failed to meet its inflation target for more
than two years. The Swedish krona weakened on news of the rate cut,
leaving it at a three year low. There was a spike of 2 percent in the
SEK against both the dollar and the euro. But Mads Koefoed thinks
that’s a short term effect.
The bank had been reluctant to lower rates over concerns about record
household debt. Unemployment is also stubbornly high at 8 percent.
Saxo’s Mads Koefoed says because of these issues it will take some
time for inflation to rise.