All 16 analysts in the poll saw a quarter point cut on Tuesday with the policy rate expected to end the year at 3.00% before falling further in early 2025.
“Swedish inflation and activity data have been weaker than policymakers expected,” Adrian Prettejohn, Europe Economist at Capital Economics said. “We think this will encourage them to cut the key policy rate from 3.75% to 3.50% … and to indicate at least a further 50 basis points of cuts over the remainder of the year.”
After cutting the policy rate for the first time in eight years in May, the central bank left it unchanged at 3.75% in June. It said then that it could make up to three more cuts before the end of the year amid lower price pressures.
The pace of headline inflation has continued to ease from its peak of above 10% in 2022, and has undershot the central bank’s target of 2% for two months in a row.
The economy has slowed with manufacturers, households and the construction sector all weakening in the second quarter.
With markets expecting the U.S. Federal Reserve to start cutting interest rates in September, worries that rapid local rate cuts could hurt the crown and push inflation back up have also moderated, with a minority of analysts seeing scope for faster Swedish cuts this year.
“We stand firm with our forecast that the policy rate will be cut at all the four upcoming monetary policy meetings and a policy rate at 2.75% year-end,” Nordea economist Torbjorn Isaksson said. “We see an additional rate cut early next year.”
However, with stubborn inflation in the euro zone and the European Central Bank only expected to cut rates twice more this year, Swedish rate setters may opt for a degree of caution.
The central bank of neighbouring Norway held its key rate on Aug. 15 and said a tight stance will likely be needed for some time to combat inflation.
The Swedish central bank has three more rate-setting meetings this year after Tuesday, in September, November and December.
The Riksbank publishes its policy decision at 0730 GMT.
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