Swedish Interest rate to be reduced before summer-Risksbank announced
In a recent announcement on Thursday, February 1, the Riksbank revealed its decision to maintain the key interest rate at 4 percent. This decision deviates from the November forecast, where the Riksbank had initially projected the policy rate to remain at this level for over two years. However, the central bank now suggests the possibility of an interest rate reduction before the summer if inflation continues to develop favorably.
Commenting on the Riksbank’s latest announcement, fully state own bank SBAB’s chief economist, Robert Boije, forecasts a potential 0.25 percentage point reduction in the policy rate at each monetary policy meeting starting in May. If this materializes, the policy rate could reach 2.75 percent by the end of the year, with further gradual reductions expected toward the estimated neutral level of around 2 percent.
The Riksbank acknowledges the uncertainty inherent in economic forecasts, emphasizing that predictions are not guarantees. The global economic landscape, characterized by recent disruptions, underscores the rapid changes in inflation and interest rates. Geopolitical risks, such as conflicts in Ukraine and Gaza, unrest around the Red Sea, and the China-Taiwan dispute, are identified as potential factors that could disrupt economic stability.
About The Author
