Sweden’s Central Bank Cuts Key Rate and Sees Two or Three More Cuts This Year

Sweden’s central bank cut its key interest rate for the second time this year and indicated it is likely to lower borrowing costs again as a faltering economy threatens to push inflation further below its target.

The Riksbank cut its key rate to 3.5% from 3.75%, in line with a poll of economists conducted by The Wall Street Journal ahead of the decision.

“If the inflation outlook remains the same, the policy rate can be cut two or three more times this year, which is somewhat faster than the Executive Board assessed in June,” the Riksbank said.

At its last meeting in June, the central bank suggested it could cut the policy rate two or three times during the second half of the year as long as the outlook for inflation holds.

After peaking at over 10% at the end of 2022, the pace of inflation in Sweden has slowed sharply, with the bank’s target measure dropping below the 2% target in both June and July. At the same time, the economy contracted by 0.8% in the three months through June, while household consumption remains weak and the labor market continues to deteriorate.

In its statement Tuesday, the Riksbank said inflation is now stabilising close to the target and the risk of inflation becoming too high again has declined significantly. At the same time, it said wage increases are moderate, while the growth outlook in Sweden and abroad is somewhat weaker than expected.

“The overall picture of the economy is worrisome and warrants more easing,” says Bartosz Sawicki, market analyst at Conotoxia. “Consumption remains in the doldrums, and GDP growth is set to account for about 0.5% year-on-year in 2024.”

Policymakers have been especially concerned about lowering borrowing costs too quickly over concerns that it would weaken the Swedish currency further and contribute to a bounce in inflation, but those risks are also dissipating as interest rates have declined abroad, easing depreciatory pressure on the krona.

Conotoxia expects the krona will continue to recover in the remainder of the year on the back of improving global risk sentiment. “Hefty market pricing of looming rate cuts should limit the downside for the currency,” Sawicki says.

The European Central Bank began its easing cycle in June, and although it took a wait-and-see approach at its most recent meeting, it kept the door open for further rate cuts this year.

In the U.S., the Federal Reserve has so far held off making its first move and last month held interest rates steady in a range between 5.25% and 5.5% for an eighth consecutive meeting.

However, weaker-than-forecast U.S. nonfarm payroll data earlier this month sparked recession concerns and prompted markets to ramp up bets for interest rate cuts. These rate cut expectations have since been trimmed following stronger data, but a September cut is largely expected by markets and Fed Chair Jerome Powell ’s speech at the Jackson Hole Symposium on Friday will be closely watched for clues.

Gold is one of the market’s go-to hedges in rocky times. Don’t forget that gold miners’ stocks are too.

The stock market’s gains in 2026 belie the rocky macroeconomic picture: elevated inflation, heightened geopolitical tensions, and jitters about the artificial-intelligence trade. That backdrop, in theory, should be the time for gold to shine. Instead, the price of the yellow metal has tumbled more than 5% so far, after last year’s blistering 65% rally. In part, the U.S. dollar’s recovery has stymied gold, which benefited from the greenback’s weakness in 2025.

Even with the precious metal’s recent weakness, gold mining stocks could be the best way to profit from this year’s uncertainty.

Gold miners “are a valuable hedge against macro risks that would likely be damaging for equities,” BCA Research’s Noah Weisberger and Rishabh Shah wrote this week.

Concerns about the Federal Reserve’s next moves to tackle inflation, the increasingly crowded AI trade, and steep valuations for tech stocks are just some of the drivers that could help gold’s price get on even footing— and lead to even bigger gains for miner stocks.

These stocks’ prices tend to outpace gold’s moves, because the companies have fixed operational costs. So when gold’s price rallies, their profit margins soar, and vice versa. For instance, the VanEck Gold Miners GDX +7.39% exchange-traded fund has fallen 11% this year as the metal has slumped.

Now, gold’s price just needs to stabilize to help miners’ stocks take off, and that seems to be happening. The precious metal has recently found support above the $4,000 level, and has stuck in a narrow range since the end of June. But its price rose ever so slightly in July, ending a four-month losing streak for the metal. Technical analysis also suggests that gold is due for a comeback.

Barron’s recently wrote that the pullbacks for both gold miners and the metal itself are overdone. Senior technical analyst Doug Busch noted that the VanEck ETF is on the “verge of a breakout” and has the potential to hit $11o in early 2027, up more than 40% from its current price.

Gold miners also have more than their role as a market hedge going for them. Their fundamentals are solid, too, says Chris Mancini, portfolio co-manager of the Gabelli Gold Fund.

“Precious metals miners are generating substantial amounts of free cash flow given profit margins of over $2,000 per ounce, and are returning this cash to shareholders through buybacks and dividends,” he said in an email.

“Buying the miners is a cheap way to get exposure to the price of gold,” he added. His fund owns Newmont NEM +6.71%, a Barron’s stock pick last year, and Agnico Eagle Mines as top holdings, as well as miners Northern Star Resources, Endeavour Mining, and Kinross Gold K+8.59%.

Miners are better businesses than they used to be, the BCA team added.

“Capex is more disciplined, margins are high and rising…and they are largely independent of the AI story,” Weisberger, BCA’s head of equities, and Shah, a senior analyst, wrote.

That last part is key. AI is disrupting the software industry and many other services and information-oriented businesses, and investors have piled into AI stocks. But ChatGPT, Claude, Grok, and other large-language models aren’t going to replace the need to mine for metals.

“Equity portfolios can benefit from exposure to quality that is uncorrelated to AI risk, and gold miners fit the bill,” the BCA team said.

They recommend that investors buy the VanEck Gold Miners ETF, which owns top miners such as Agnico, Barrick Mining ABX +7.24%, and Newmont.

An important bonus for big gold miners’ stocks is that their valuations are attractive after the gold’s pullback, too. The VanEck ETF is now trading at just a little more than nine times next year’s earnings estimates. That’s a big discount to its five-year average price-to-earnings ratio of 14, according to FactSet.

What’s more, the ETF is currently valued at a more than 50% discount to the S&P 500 SPX -0.17%, which is trading for about 19 times earnings estimates for 2027. Mining stocks have typically traded at just a 25% discount to the broader market over the past five years. So there is significant upside for the group if valuations move back toward normal levels.

One factor that complicates mining stocks as a market hedge, of course, is if stocks bounce back, which has been the case so far in August.

But both the market and economic outlooks remain cloudy, and investors remain nervous about the Fed’s next moves and AI stocks. Gold miners should do just fine, even if the anxious mood on Wall Street persists.