Central Bank Interest Rate Decisions Today in the U.K., Norway, Sweden, and Malaysia – Currency Thoughts
Central Bank Interest Rate Decisions Today in the U.K., Norway, Sweden, and Malaysia
May 8, 2025
The Bank of England’s base rate was reduced by another 25 basis points to 4.25%. This was the fourth quarter percentage point decline since August 1, 2024. Although the decision matched expectations, it belies the dispersion of opinions on the bank’s Monetary Policy Committee. Only 5-of 9 members, including Governor Bailey, favored the group’s decision. Mann and Pill voted to leave the rate at 4.5%, while Dhingra and Taylor wanted a 50-basis point cut. Core consumer price inflation at 3.4% remains above target, but substantial disinflation has occurred from a peak total CPI of 11.1% in October 2022. A released statement speaks of a wide range of outcomes in global trade strains, noting some recent lessening of tension and affirming the meeting-to-meeting nature of policy-making going forward:
Depending on how trade policies unfolded, UK inflation could be affected by a wide range of factors such as shifts in trade patterns, supply chain disruptions in the UK and abroad, and movements in global exchange rates… Although the current impact of the global trade news should not be overstated, the latest news was sufficient for a majority of members to judge that a reduction in Bank Rate was warranted. This level of Bank Rate would still leave the stance of monetary policy sufficiently restrictive to bear down on inflationary pressures, were they to re-intensify.
The Bank of Norway’s policy rate was left unchanged at 4.5% as analysts were anticipating, but officials think that an initial moved downward is probable sometime this year. According to a released statement today, “There is uncertainty about future economic developments, but the Committee’s current assessment of the outlook implies that the policy rate will most likely be reduced in the course of 2025.” Norway’s central bank rate has been at 4.5% since December 2023. Consumer price inflation had spiked from 2.2% at end-2024 to 3.6% in February but is now down to 2.6%. At the height of the Covid pandemic the policy interest rate was zero percent from May 2020 until September 2021, but 2023 saw increases totaling 225 basis points, and another 175 bps of rise occurred last year.
At the Swedish Riksbank, the Executive Board voted to keep their key interest rate at 2.25%. Six previous cuts beginning a year ago and most recently in January had reduced the rate level from a peak of 4.0% first reached in September 2023. A released statement asserts that “uncertainty in the global economy has increased significantly since the change of US president” but goes on to say “it is somewhat more probable that inflation will be lower than that it will be higher than in the March forecast. This could suggest a slight easing of monetary policy going forward.” Like so many other monetary authorities grappling with the brave new world, those in Sweden chose to await further clarifying information before proceeding with rate normalization.
Officials at Bank Negara Malaysia also as expected elected not to change their key interest rate, which has been at 3.0% since a fifth and final hike done in May 2023. “Recognising that there are downside risks in the economic environment, the MPC remains vigilant to ongoing developments to inform the assessment on the domestic inflation and growth outlook.” The last rate cut occurred in July 2020. Consumer price inflation in Malaysia during the first quarter of 2025 amounted to just 1.6% overall and 1.9% on a core basis. While the global economic picture has been worrisome, “growth Malaysia is expected to be anchored by resilient domestic demand.”
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of England, Central Bank of Malaysia, Norges Bank, Swedish Riksbank
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