Sweden's central bank cut its key interest rate to 2% from 2.25% as expected today, saying mild inflationary pressures gave it room to boost weak economic growth.
"The economic recovery that began last year has lost momentum, and inflation is expected to be somewhat lower than in the previous forecast," the Riksbank said in a statement.
"The forecast for the policy rate entails some probability of another cut this year."
The central bank last cut the policy rate in February when it said an easing cycle that began in spring 2024 was likely done.
However, uncertainty surrounding US President Donald Trump's on-again, off-again tariff policies have hit business and household sentiment, squeezing growth.
Holding the policy rate unchanged in May, the Riksbank said that if inflation remained tame - as expected - easier policy could be justified in the months ahead.
The latest figures showed only mild price pressure and the overwhelming majority of analysts in a Reuters poll expected a rate cut.
The median forecast had been for no further changes this year.
Sweden's gross domestic product shrank 0.2% in the three months through March on an quarterly basis. March and April both showed signs of recovery, but the economy is expected to be sluggish for the rest of the year with think tank NIER projecting just 0.9% growth.
"There are favourable conditions for stronger economic activity in Sweden going forward. However, the recovery is proceeding more slowly than expected," the Riksbank said.
The Riksbank will deliver its next scheduled rate decision on August 20.
