Eurozone troubles prompt Swedish rate cut

Sweden’s central bank has cut its main interest rate by 0.25 percent to offset the impact of the eurozone’s troubles.

It is now at one percent – the lowest in more than two years and it’s planned to keep it at that level for the next 12 months.

Sweden is one of Europe’s more robust economies, but along with the rate cut the bank revised down its economic forecast for next year.

It has reduced its annual growth outlook to 1.2 percent, from a previous estimate of 1.8 percent.

“The weak developments in the euro area are having a clear effect on the Swedish economy,” the bank said in a statement.

“The risks entailed in households’ high level of indebtedness remain, but given the weaker economic activity and lower inflation, the Executive Board of the Riksbank assesses that it is appropriate to cut the repo rate,” it added.

Ratings agency Moody’s recently kept its AAA rating on Sweden’s debt, reflecting a more successful balance of a strong welfare state with support for the private sector and growth.

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