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Swedish interest rate cut “safe as houses” – unlike in the eurozone

by AI | 14.Aug 2024 | Europe in brief AI

Swedish inflation is still well below the Riksbank’s target. An interest rate cut is “safe as houses” according to analysts. But the ECB is expected to hesitate.

Euro banknotes and coins. Photo: Karl-Josef Hildenbrand/dpa

Stockholm – The Swedish inflation in July rose to 1.7 percent according to the measure KPIF, according to Statistics Sweden (SCB). And it was slightly higher than the economists’ average forecast of 1.6 percent.

But the picture is still clear, according to Nordea’s chief analyst Susanne Spector. There will be a rate cut from the Riksbank next week by 0.25 percentage points to 3.50 percent. It is “safe as a vault”.

“Anything else would be an enormous surprise,” she says, since the Swedish central bank Riksbank has an inflation target of 2.0.

The Swedish policy rate is 3.75 percent. The Riksbank last cut the key interest rate in May, which was the first time in eight years.

In June, KPIF inflation was 1.3 percent. KPIF inflation, which the Riksbank uses in its inflation target, is an underlying measure of inflation where the effects of mortgage rates have been excluded.

Inflation in the eurozone rose to 2.6 percent in July, according to preliminary calculations from the statistical office Eurostat released on July 31. This increase is expected in turn to make the European Central Bank ECB hesitant about a new rate cut in September.

(August 14)