Sweden’s central bank earlier this morning aggressively cut its key interest rate by 1% to 1% in an attempt to bolster its rapidly deteriorating economy. The repo rate is now at its lowest level since its introduction in 1994 and marks the lowest official Swedish interest rate since records began in 1907.
The central bank said that the large cut was necessary to dampen the fall in production and employment and to attain the inflation target of 2%. The bank warned that the downturn in the economy now looks as if it will be even worse than was thought in December and the repo rate may need to be cut slightly further in 2009.
