Sweden's central bank cut its key interest rate to 2.75% from 3.25% on Thursday, as expected, and said that if the economic and inflation outlooks remain the same it may also cut the rate in December and in the first half of 2025.
The pace of inflation - which peaked at over 10% in late 2022 - has dipped well below the central bank's 2% target, while the Swedish economy has stalled and is showing little sign of recovery in the short term.
"It is important in itself that economic activity strengthens, but it is also a necessary condition for inflation to stabilise close to the target," the Riksbank said in a statement.
Donald Trump's victory in the U.S. presidential election, however, has raised uncertainty over the global economic outlook, with questions around how his policies will affect international trade, inflation and growth, the fight against climate change and support for Ukraine in its war with Russia.
"There is also a risk of a weaker crown," said Lars Kristian Feste, head of Fixed Income at Lannebo Funds.
Many economists expect higher inflation and lower growth - a difficult combination for central banks to handle.
Sweden's central bank has now cut the policy rate four times this year, starting in May.
Analysts in a Reuters poll had expected a half percentage point cut on Thursday.
Other central banks are set to announce their policy decisions later on Thursday, starting with Norway at 0900 GMT. The Bank of England will announce its rate decision at 1200 GMT and the U.S. Federal Reserve at 1900 GMT.
Norway's central bank is expected to keep borrowing costs on hold, with a first rate cut coming early next year, while the BOE and the Fed are each expected to deliver quarter point cuts.
