Swedish central bank reduces policy rate to 2.25%

The Swedish central bank reduced its policy rate by 0.25 percentage points to 2.25 percent on Wednesday, reported Xinhua.

The rate will take effect on Feb. 5, the bank announced. It is the seventh policy rate cut since reductions began last May, when the rate stood at 4 percent.

The lower interest rate will gradually provide a positive contribution to demand in the Swedish economy, said the bank, adding that the repeated interest rate cuts "have yet to reach full impact on interest expenses and demand in the economy."

"There are signs that an economic rebound is on the way, but activity remains weak," noted the bank.

It warned that there are several factors that could affect economic development, and thereby also the policy rate going forward. These include developments abroad, such as economic policy in the United States and Europe, and ongoing geopolitical tensions.

"There are risks linked to the recovery in the Swedish economy and the krona exchange rate," warned the bank. Current inflation in Sweden is around 2 percent, it said.