Sweden lowers key interest rate to 1.25 percent

AP News
Posted: Sep 06, 2012 4:03 AM

STOCKHOLM (AP) — Sweden's central bank has cut its key interest rate by a quarter of a percentage point to 1.25 percent, saying economic growth will slow due to the downturn in the eurozone.

The Riksbank said Thursday that weak demand from the 17-country eurozone would "dampen" Swedish exports and hold back the economy, which it said had been "unexpectedly resilient" this year.

Sweden's economy grew 2.2 percent in the second quarter from a year earlier, according to European Union statistics. The eurozone contracted by 0.4 percent.

The Riksbank lowered the "repo" rate to "prevent inflation from being too low in the coming period" and said it expects the rate to remain at that level until the middle of next year.