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IN PICTURES: ‘New era’ as Nato flag hoisted outside Swedish parliament

'Sweden wants peace,' said King Carl XVI Gustaf as he spoke at a flag-hoisting ceremony outside the Swedish parliament to mark his country's Nato membership.

Published: 18 March 2024 11:17 CET
IN PICTURES: 'New era' as Nato flag hoisted outside Swedish parliament
King Carl XVI Gustaf and a group of protesters in the background. Photo: Jonas Ekströmer/TT

“A new piece of Swedish history is being written,” said the King in his speech on Monday.

“We have left behind the military freedom of alliance founded under Karl XIV Johan,” he added. “A new era of security policy has begun.”

Sweden applied to join Nato following Russia’s full-scale invasion of Ukraine in 2022.

Prime Minister Ulf Kristersson, King Carl XVI Gustaf, parliamentary speaker Andreas Norlén, Social Democrat leader Magdalena Andersson, Supreme Commander of the Armed Forces Micael Bydén, among others. Photo: Jonas Ekströmer/TT

The King said that Sweden’s membership would contribute to regional stability, but wasn’t targeted at anyone.

“Sweden wants peace. Thus wrote my grandfather, Gustav VI Adolf, and Prime Minister Tage Erlander to Swedish citizens in the 1960s. That’s still the case today. Sweden threatens no one. Sweden wants peace,” he said.

The Nato flag flying next to the Swedish flag and the EU flag outside parliament. Photo: Pontus Lundahl/TT

Prime Minister Ulf Kristersson, speaker of parliament Andreas Norlén and military supreme commander Micael Bydén also attended the ceremony on Monday, alongside members of parliament, government ministers and several party leaders.

US ambassador Erik D Ramanathan and Charlotte Petri Gornitzka, director-general of the Swedish Civil Contingencies Agency. Photo: Pontus Lundahl/TT

Across the water, outside the Royal Palace, a group of around 20 people held up banners and loudly chanted “no to Nato”.

Demonstrators holding signs reading Free Palestine; Sweden doesn’t need Nato for peace – Nato needs Sweden for war; No to Nato; No to war crimes club Nato. Photo: Samuel Steén/TT

The war in Ukraine and Sweden’s Nato application has not only boosted support for Nato, but also for peace movements.

The Swedish Peace and Arbitration Society (Svenska freds) has more than doubled its membership in two years, from just over 6,000 in February 2022 to 15,000 at the start of March 2024, reported regional public radio broadcaster P4 Jönköping earlier on Monday.

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The Swedish branch of the Women’s International League for Peace and Freedom (Internationella kvinnoförbundet för fred och frihet) has grown by 35 percent since January 2022, and the Christian Peace Movement (Kristna fredsrörelsen) grew by 12 percent in 2023.

According to Kerstin Bergeå, chair of Svenska freds, which is against Nato membership, a total of 200 new members signed up on the same day that Hungary ratified Sweden’s application.

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MONEY

Swedish central bank lowers interest rate for first time in eight years

Sweden's Riksbank central bank has lowered the country's main interest rate by 0.25 percentage points to 3.75 percent, down from 4 percent. This is the first time the bank has lowered the rate since 2016.

Published: 8 May 2024 09:31 CEST
Swedish central bank lowers interest rate for first time in eight years

The decision to lower the so-called policy rate was widely expected, as the central bank itself indicated in a policy rate prognosis from March that it could lower rates between five and six times before the end of 2025, starting in either May or June this year.

“Monetary policy and diminishing supply shocks have contributed to inflation falling, and now it’s nearing the target,” the bank wrote in a press statement.

The bank’s inflation target is 2 percent. In March, inflation was just 2.2 percent.

“If the inflation outlook remains the same, the policy rate could be lowered at least two more times in the second half of the year,” the bank wrote, adding that new information since its most recent monetary policy report was published in March “strengthens the picture of inflation also being closer to the target in the slightly longer term”.

This effectively rules out the possibility of a further rate cut in June.

It also warned that the outlooks for inflation are “uncertain”, highlighting the strong American economy, geopolitical unrest and the krona’s exchange rate as risk factors which could cause inflation to rise again.

“Changes to monetary policy should therefore be taken carefully, with gradual cuts to the policy rate.”

Thursday’s announcement is crucial, as the policy rate is the bank’s main monetary policy tool. It decides which rates Swedish banks can deposit in and borrow money from the Riksbank, which in turn affects the banks’ own interest rates on savings, loans and mortgages.

If bank interest rates are high, it’s expensive to borrow money, which means people spend less and as a result inflation drops.

This cut to the policy rate won’t immediately lower the cost of your mortgage, but it’s likely to have a knock-on effect.

At its last meeting before the cut, the bank chose to keep rates the same at 4 percent, where they stood since September last year – the highest policy rate seen in Sweden since 2008, and the end of almost a year and a half of interest rate hikes.

The bank predicted in March that the policy rate could drop to as low as 2.75 percent, a drop of 1.25 percentage points, by the end of 2025. If mortgage rates also drop by the same amount, it would reduce the cost of a 3 million kronor mortgage by around 3,000 kronor a month.

The new rate will come into effect on May 15th.

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