Latest news with #SusanneSpector
Local Sweden
2 days ago
- Business
- Local Sweden
Will Sweden's central bank cut interest rates next week?
Sweden's central bank, the Riksbank, lowered the country's key interest rate to 2 percent back on June 18th. The next interest rate announcement is scheduled for Tuesday, August 19th. How likely is it that the bank will choose to cut the rate? Advertisement At the time of the June meeting, most economists expected the bank to announce a further quarter-point cut in August, reducing the reference interest rate to 1.75 percent. Since then, however, inflation has crept up worryingly, hitting 2.9 percent in June and 3 percent in July. This has left economists doubtful over whether the bank will risk another cut this month, given that inflation remains stubbornly above the 2 percent it is supposed to track under its mandate. "The big picture is that inflation is way over the Riksbank's target," Susanne Spector, chief economist at Danske Bank, told the TT newswire, saying she had been surprised by the 1.1 percent month-on-month increase in food prices revealed in a report from Statistics Sweden on Friday. The 3 percent rise in prices was slightly below the consensus rise of 3.1 percent, put together by the Bloomberg news agency. It was also arguably seasonal - driven by high sales of ice cream and soft drinks as a result of the hot weather. But Spector said that the higher-than-targeted inflation figures would nonetheless make the Riksbank more cautious. "The Riksbank is in a difficult situation with weaker economic development, but where inflation has been above 3 percent for two months in a row," she said. Advertisement She was unusual among bank economists in predicting not only that there would be no rate cut on August 19th, but also that there would be no further cuts this year. Alexandra Stråberg, economist for the Länsförsäkringar bank, agreed that there was now little chance of the Riksbank cutting interest rates at the August meeting. "The summer's inflation figures have been something of a cold shower for both the Riksbank and Swedish households. This was the last thing the economy needed in the current situation," she said. She said that a degree of extra summer inflation was to be expected, however. "It's really not that unusual, but the most important thing about this outcome is the direction," she said. "You want to see a downward trend to feel confident about lowering the interest rate and we have no clear trend, but inflation seems to have stalled around 3 percent." SEB's chief economist, Jens Magnusson, took comfort with the fact that inflation was slightly below the consensus forecast. "This means we can assume that the Riksbank will lower the key interest rate in September. If the figure had landed higher today, that would have been more unlikely."
Local Sweden
04-06-2025
- Business
- Local Sweden
Will Sweden's central bank lower the interest rate this month?
Sweden's central bank, the Riksbank, lowered the country's key interest rate to 2.25 percent back in February, where it has remained since. The next interest rate announcement is scheduled for June 18th. How likely is it that the bank will choose to cut the rate? Advertisement Anders Wallström, head of forecasting at Swedbank, thinks that we could see two more cuts to the policy rate this year. "At the moment we think there will be a cut now and another one in September," he told the TT newswire. The policy rate is the central 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. Susanne Spector, Danske Bank's chief economist, had a slightly different prediction. "We think that the bank will wait until August to cut the rate, but that they'll open up slightly to a cut now while waiting for more information," she said. Previously, the bank thought there would be no cut at all. Advertisement Spector added that opening up to a cut in June would lessen the pressure on Swedish households. "There are still some risks, price plans are high and inflation is above the target," she added. Swedbank and Danske Bank both believe that Sweden's weak GDP figures from the end of May are a sign that the central bank will need to stimulate the economy further by cutting the rate from the current level. The question, however, is how quickly it will do so. "It's not set in stone and it's a very uncertain situation," he said of a cut in June. "What's weighing into the decision is not really inflation right now, but rather a weak economy. Those [GDP] figures are low and that would support a cut." Inflation figures for May are scheduled to be released on June 5th. Swedbank expects the figures for CPIF inflation, the measurement Sweden's central bank uses, to be 2.7 percent, well above the 2 percent target set by the central bank, while Danske Bank predicts a figure of 2.7 percent. CPIF inflation represents the consumer price index with mortgage fluctuations taken out of the equation. If the inflation figures for last month are lower than expected, that would increase the chance of a cut to the key interest rate.
