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Sweden cuts interest rates to avoid deflation
Sweden’s central bank yesterday cut interest rates by an unexpectedly large 50 basis points, to 0.25 per cent, in an attempt to head off deflation.
The cut led to a sharp fall in the Swedish krona with it losing two per cent against both the US dollar and euro.
The central bank said that because Swedish inflation had been negative or zero in the first five months of 2014, there was a possibility of further cuts later this year.