EUR/SEK settles below 5-week high, posts weekly gain

The EUR/SEK currency pair settled below Friday’s high of 10.9945, its strongest level since May 2nd, in the wake of the European Central Bank’s policy decision.

The ECB lowered all three of its benchmark interest rates by 25 basis points:

– the main refinancing operations rate to 2.15%;
– the deposit facility rate to 2.00%;
– the marginal lending rate to 2.40%.

The policy decision reflected updated inflation and GDP forecasts.

Euro Area’s headline inflation is forecast at 2.0% in 2025 (compared to 2.3% in the prior projection), at 1.6% in 2026 (compared to 1.9% in the prior projection) and at 2.0% in 2027.

Core inflation is projected at 2.4% in 2025 before easing to 1.9% in 2026.

And, GDP growth is projected at 0.9% in 2025, at 1.1% in 2026 (compared to 1.2% in the prior forecast) and at 1.3% in 2027, driven by higher real incomes, strong labor markets and rising government investment.

During the post-meeting press conference, ECB President Christine Lagarde said that the central bank was moving closer to the end of its easing cycle, indicating a potential pause after this week’s cut.

Meanwhile, in Sweden, annual consumer inflation has eased to its lowest level since November 2020 in May.

The inflation rate slowed to 0.2% in May from 0.3% in April and below market consensus of 0.4%.

May has been the 10th straight month with inflation below the Riksbank’s 2% target.

The EUR/SEK currency pair settled 0.34% higher at 10.9832 on Friday.

The exotic Forex pair gained 0.98% for the week.