On Wednesday, several major banks updated their forecasts on the expected interest rate path of the Swedish central bank, Riksbanken. Handelsbanken, one of the leading banks, reaffirmed its assessment that Riksbanken will only cut rates once more this year, down to 2.25%. According to their forecast, this cut is expected to happen in January.
“It is sufficient for the interest rate to be lowered to a normal level, such as 2.25 percent, to secure the recovery and inflation at the 2 percent target,” said Handelsbanken’s chief economist, Christina Nyman.
One notable revision made since the economic forecast in September is the expectation for housing prices to increase by 6% per year from 2025-2027, as opposed to the previous forecast of 3-4% in September.
SEB, another major bank, believes that Riksbanken will announce two rate cuts this year. However, the timing of these cuts has been adjusted. According to a recent update from the bank, Riksbanken is now expected to cut rates in January and May, as opposed to the previous forecast of January and March.
“We predict another rate cut to 2.00 percent later this year, but have shifted the cut from March to May. Growth is expected to exceed its potential level from mid-2025, and the policy rate will likely remain at 2.00 percent thereafter,” stated a newsletter from SEB.
Similarly, Nordea also foresees a policy rate bottoming out at 2% before summer, according to their latest prognosis released on Wednesday.
In contrast, Danske Bank and Swedbank, in their most recent forecasts from December and November respectively, predicted a policy rate of 1.75% by the end of the year.
The next announcement from Riksbanken is scheduled for January 29th.
Here is a summary of the policy rate forecasts for the end of the year from various banks:
– Danske Bank: 2.50% in 2024, 1.75% in 2025 and 2026
– Handelsbanken: 2.50% in 2024, 2.25% in 2025 and 2026
– Nordea: 2.75% in 2024, 2.00% in 2025 and 2026
– SBAB (annual average): 3.62% in 2024, 2.11% in 2025, 2.00% in 2026
– SEB: 2.50% in 2024, 2.00% in 2025 and 2026
– Swedbank: 2.50% in 2024, 1.75% in 2025 and 2026
Source: Compilation by Finwire
Overall, the outlook for the Swedish interest rates remains uncertain, with varying predictions from different financial institutions. The upcoming decisions and announcements from Riksbanken will be crucial in guiding the country’s economic recovery and inflation targets. Stay tuned for more updates on this evolving situation.