The Swedish Riksbank opens for interest rate cuts in May – E24

The governor of the Riksbank keeps the key interest rate in Sweden at 4 percent. The DNB economist is surprised by the forecast going forward.

On Wednesday morning, new forecasts for inflation and the key interest rate came from Sweden’s central bank, the Riksbank.

There is by far the most tension linked to the signals about when the first interest rate cut will come.

The key interest rate is kept steady at 4 percent. It is completely in line with what the analysts and experts had believed in advance.

– If the inflation outlook continues to be favorable, the key interest rate may
will probably be lowered in May or June, writes the Riksbank in the recent monetary policy report.

– However, there are risks that could lead to inflationary pressure increasing again,
for example, new supply disruptions as a result of the geopolitical unrest, that
the krone continues to weaken, or that the companies’ price behavior does not normalize as expected, the report states.

– Earlier than we had imagined

Senior economist at DNB Markets, Oddmund Berg, says he is surprised that the Riksbank is highlighting an interest rate cut in May as a possibility.

– They were more duet duet You are “dove” when you believe that the inflationary pressure is so low that you have to keep a low interest rate.than we had imagined. It is surprising that they mention May, he tells E24.

He points out that there has previously been uncertainty about whether the Riksbank will cut before the European Central Bank (ESB) and the American Central Bank (FED).

– May is not very much earlier, but it is earlier than we had imagined.

Good inflation figures

Earlier this week, senior economist at SEB, Robert Bergqvist, told E24 that he thought the first interest rate cut would come as early as May.

He also believed that the Riksbank will get ahead of both the ECB and the FED.

There have been many promising key figures from Sweden recently.

The Riksbank closely monitors inflation as measured by CPIF CPIFThe price increase excluding interest rate changes on mortgages, which stood at 3.3 per cent in January. It was just above the Riksbank’s forecast. In February, it came in at 2.5 percent. It was below the Riksbank’s forecast. Bergqvist in SEB says CPIF inflation is expected to stay around 2 per cent this summer.

Starting to show weakness

The Swedish Economic Research Institute (KI) predicts that the policy rate will be cut four times by the end of 2024. They also believe that GDP in Sweden will rise by 0.8 percent and that inflation will fall to 2.9 percent this year.

Robert Bergqvist in SEB said earlier this week that the Swedish economy has already started to show signs of weakness as a result of high interest rates.

He refers to the Riksbank’s and KI’s measurements and says the companies’ plans for price increases in the coming year are limited.

– Conversations with business customers also confirm the picture of moderate price increases in 2024, says Bergqvist.